When you decide to leverage the scalability and flexibility of the cloud to operate your business instead of investing in physical infrastructure, you know you can achieve cost savings from cloud computing. However, you should also know that there are more things you can try to save even more while still utilizing these cloud services. This is where cloud cost optimization comes into play.

What is Cloud Cost Optimization?

Cloud cost optimization means using different strategies, best practices, and tools to reduce your cloud expenditures while getting the most value out of the cloud resources you use.

The main goal of cloud cost optimization is to help your business effectively reduce cloud costs without compromising product or infrastructure performance. It involves identifying areas where you can optimize cloud costs, such as managing and rightsizing your resources and leveraging discounts. In this article, you will learn the benefits of cloud cost optimization and how it can help your business achieve cost-efficiency. But before that, you should understand first how cloud cost management is related to all of this.

The Increasing Importance of Cloud Cost Management

As years go by, many businesses can operate through the cloud, renting cloud services from different cloud service providers (CSPs) and enjoying the benefits of cloud computing. However, along with the benefits is the challenge of managing cloud costs effectively. The need for cloud cost management is becoming more crucial.

Cloud cost management is the process of monitoring and optimizing your cloud expenditures. It aims to help you better understand your cloud expenses and make informed decisions. It involves tracking your cost and usage, enhancing budgeting and forecasting, finding opportunities to optimize costs, and improving team collaboration. Through effective cloud cost management, you can achieve cloud cost optimization.

Detailed Benefits of Cloud Cost Optimization

This section will help you fully understand why cloud cost optimization is essential and how it can help your business.

Enhanced Visibility and Control Over Cloud Spending

Imagine receiving an invoice with inflated costs and not knowing how or where these expenses came from. We all know that would be extremely frustrating and detrimental to your business.

With cloud cost optimization, you can have a detailed view and a complete picture of cloud resources utilized in your business, including the people, products, and processes driving your cloud spend. Enhanced visibility means transparency on how much your cloud costs are on different cloud services and who spent a certain amount on what. This can help empower your business, give control over cloud spending throughout the whole organization, and allow you to make data-driven decisions.

Be the boss of your cloud spending and get this feature with Octo.

Cost Savings and Budgetary Efficiency

Once you have insights into your cloud spending, it will be easier to see areas where you can reduce your cloud costs effectively. For example, adjusting your spending and matching it to the actual demands of your business can lead you to optimized costs.

According to Gartner, following the best practices for cloud cost optimization can help businesses save up to 30% on their cloud costs. Imagine achieving that percentage - it could significantly benefit the overall growth of your business.

Here's another thing you should know about cloud cost optimization - aside from helping you achieve cost savings, it also improves your budgetary efficiency through the valuable data provided by the cloud cost optimization tools you use. By understanding the history of your usage patterns and trends, you can predict future costs and plan your budgets accordingly.

Improved Cloud Performance and Efficiency

Cloud cost optimization doesn’t just focus on reducing your cloud costs but also aims to make you not regret choosing to migrate into the cloud for your business operations. We all know that on top of optimizing your costs, the performance of your application is your priority.

As you try to optimize your costs, for example, rightsizing your instances, you are also improving your cloud performance and making your applications run efficiently or reducing the risks of performance issues.

Facilitates a Culture of Cost-Consciousness and Financial Accountability

We define cost optimization as the process of optimizing your cloud costs without compromising your product’s performance. However, its purpose doesn’t end at that. It also aims to help your business create an environment where financial discipline is prioritized.

FinOps, short for Financial Operations, is a practice that offers a collaboration between different personas (Executive, Finance, Engineering) as it aligns the organization’s cloud spending with its goals. Effective cloud cost optimization can be achieved through FinOps. By following FinOps best practices, you can encourage everyone to be conscious of their spending but also make them take responsibility for the costs associated with their activities - financial accountability.

Agility in Scaling Operations Up or Down Based on Demand

Whether you’re a startup or an established business, eventually, you will need to decide whether you should scale up or down your cloud resources and match them to your business needs.

For instance, in a scenario where your website is experiencing sudden traffic spikes because a lot of people are trying to use it, you can scale up your cloud infrastructure by adding more virtual machines (VM), increasing storage capacity, etc. Or, if you have launched a new application and unfortunately failed to attract your expected number of customers or users, you should probably scale down or try deallocating your excess resources to help you save costs.

With cloud cost optimization, you have the power to quickly spot areas that need effective resource allocation and adjust your resources to what your business demands. This way, you can avoid unnecessary costs that you get when the resources you have allocated are much greater than what you need and end up unused (over-provisioning) or risk performance issues when you allocate insufficient resources (under-provisioning).

Through cloud cost optimization, you can automatically or manually scale up or down your resources based on real-time demand and handle various workloads efficiently.

Optimizes Return on Cloud Investment (ROI)

Return on investment (ROI), in the context of cloud computing, refers to the benefits that your business gains as a result of adopting the cloud in your business operations. Return on cloud investment is not just about the financial gains but also about why the cloud is worth investing in. Let's see how cloud cost optimization can help you improve your cloud ROI.

• An optimized cost means an improved ROI. As we have mentioned earlier, optimizing costs includes finding areas where you need to adjust your resources, whether you scale up or down based on what your business demands. If you do it right, it can help you reduce your expenses and improve your ROI.
• With effective cloud cost optimization, you can make sure that your cloud investment is not a waste. If you can recall, another way of optimizing your cloud costs is by rightsizing your resources to match your workload requirements and enhance your application’s performance and efficiency. This tells us that you have maximized the value of your cloud investments.
• Cloud cost optimization includes monitoring and analyzing your cloud usage and costs with granularity. As you find cost drivers and usage patterns, you will be able to make informed decisions and effectively allocate budgets, thus optimizing your cloud ROI.

To put it simply, optimizing your cloud ROI through cloud cost optimization means maximizing the value of your cloud investments while still controlling and reducing cloud costs.

Support for Multi-Cloud and Hybrid Cloud Strategies

A multi-cloud strategy, you can also describe as “not putting all your eggs in one basket,” and most businesses are doing it today. It means utilizing cloud services from different cloud providers and not relying on just a single provider. Businesses are using different cloud platforms, which could be public cloud, private cloud, or hybrid cloud (a combination of both), for various workloads.

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Despite how beneficial a multi-cloud strategy is, there is still a downside to this. Managing and optimizing costs on one provider is challenging enough; imagine if you have to manage your costs across three different cloud providers - the complexity will surely multiply significantly.

Here are some challenges you might face upon leveraging a multi-cloud strategy:

• Understanding the complex billing that each provider has sent you can be time-consuming
• Increased costs in your invoices
• Assess what costs you a lot
• Identify areas where you can reduce your costs

This is where cloud cost optimization enters the picture. As we have established earlier, cloud cost optimization is achieved with effective cloud cost management. To get through these challenges, you must utilize a multi-cloud cost management tool. This tool can support you in managing and optimizing your costs.

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Some businesses are still hesitant to adopt multi-cloud and hybrid cloud strategies because of the underlying challenges of managing and monitoring multiple cloud platforms. But with the right tool, surely you can achieve cloud cost reduction and optimization, no matter how complex it is to manage various cloud environments. Keep reading to see why Octo is the best tool for you.

Cloud Cost Optimization with Octo by Alphaus

Considering what you have learned about the benefits of cloud cost optimization, you may be wondering what steps to take next. Well, you are one step closer. Octo, a cloud cost management tool of Alphaus Inc., can help you manage your cloud costs better and optimize cloud costs effectively.

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Starting from visual reports and customizable dashboards to insights, cost alerts, and anomaly detection, your organization can make wiser and more strategic decisions to align with your business goals. With Octo, you can optimize your cloud costs while maximizing the value and performance of your cloud resources.

Unlock the benefits of cloud cost optimization with Octo by Alphaus.

Cloud Cost Optimization FAQs

Why do we need cloud cost optimization?

Through cloud cost optimization, you can avoid unnecessary spending and have control over your budgeting. Aside from that, cloud cost optimization also helps businesses have more efficient and less complex cloud environments. There are so many reasons why we need cloud cost optimization, but you must know that it all boils down to one reason - to make sure that you are getting the maximum value of your cloud investment.

What are the benefits of cloud computing?

Cloud computing allows organizations to operate their business without investing in physical infrastructure. It is beneficial for organizations in many ways, including:

• Utilizing cloud computing resources offered by different cloud providers allows you to process data quickly. Your applications can run faster and more efficiently by taking advantage of the scalability and robust performance of cloud computing.
• The cloud is accessible anytime and anywhere. Your employees, even the users or customers of your organization can access their data online.
• You don’t have to acquire your own physical requirements like servers, cables, routers, network switches, generators, etc. You can just rent these from a cloud provider and pay for what you use.
• No need to have your own backups onsite or offsite or worry about data loss because your chosen cloud providers can save your data in their secure data centers. Cloud providers store multiple copies of your constantly updating data in their cloud storage, which makes it easier to restore them.
• Whenever you quickly need extra computing power, the cloud makes it easier. You can instantly use the resources that you need to deploy your applications without buying new hardware or software.
• Not having your own IT infrastructure also means reducing your energy consumption and carbon footprint.

Why is cost optimization important?

A Gartner report says that companies may end up overspending by 20 to 50% if they fail to recognize the mistakes they made in their cloud adoption. This is what makes cost optimization important. It is essential if you want to avoid wasting your money and ensure that you get the most value from your cloud investment. With effective cloud cost optimization, you can make sure that you are only paying for what you need.

What are the best practices for cloud cost optimization?

The best practices for cloud cost optimization are:

• Tracking your usage
• Choosing the right pricing plans
• Being aware of your spending
• Regularly reviewing the cloud resources you use
• Utilizing cloud cost management tools

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