Keeping Public Cloud Spending in Check During COVID-19 Times

It’s pretty much several times a day that we hear about how some aspect of life has been turned on its head by the current global pandemic, and while the workings of the digital world won’t be front and centre for a lot of people it most certainly is for us. Here at 4GoodHosting, that ongoing interest and eyes wide open nature is likely a large part of what puts us among the best Canadian web hosting providers.

With that said, even if you’re not working in the some wrinkle of the industry it’s still going to be hard not to be aware of the importance of cloud computing. It’s very much a staple of the digital nature of business, and it’s at the very heart of the IoT (Internet of Things). Which brings us today’s topic – what can webmasters or shot callers of other stripes do to keep the current situation from taking cloud computing costs and pretty much running away with them?

Managing financial uncertainty is going to be a challenge, even during the best of times. There are two major factors driving the need for continuous cloud cost optimization; first, there’s the evolving global financial conditions in response to the COVID-19 pandemic. Next, we’ve got the accelerating adoption of cloud usage.

A recent report is showing that organizations expect cloud spend to go up by 47% in the coming year. This rapidly growing spend leads to challenges in forecasting, as the majority of respondents contributing to the report indicate they’ve exceeded their cloud budget by an average of 23% and they don’t see much in the way of what can be done to counter that.

More Difficult to Optimize Cloud Costs

Along with the growth of crowd spending goes businesses finding it difficult to ensure that cloud costs are optimized. The consensus is that nearly a third (30%) of cloud spending is wasted, and 73% of respondent see the need to optimize their existing use of cloud as a primary initiative for this year.

As one might expect, the new digital-heavy realities of life that COVID-19 has thrust upon us all has meant that cloud use is accelerating, and the situation is now that about half of organizations are expecting their cloud usage to exceed prior plans. Oppositely, it’s also expect that other organizations – albeit fewer of them – will see their cloud use decrease as their businesses are impacted by the pandemic. Either way it becomes imperative for organizations to optimize cloud costs.

Finding Savings in Operating Costs

The best way to counter this is with on-demand cloud spend. Unlike many other IT costs that are set in long-term contracts, with this you can benefit from nearly instantaneous savings by eliminating idle resources or downsizing over-provisioned resources. A focused plan for cloud cost optimization can yield significant benefits, to the tune of as much as 20 to 25 percent savings over just a few months.

In addition, with on-demand cloud spending you are better prepared to manage cloud costs efficiently as cloud usage speeds up or slows down.

So the question then becomes – what can you do to achieve ongoing reductions in cloud costs? A good place to start is with these 4 best practices:

  1. Conduct Assessments Before Signing up for Discounts

A discount of any sort is always going to look good, but you need to look at them more equivocally and evaluate the goals of those involved. Make no mistake about it – cloud providers aim to lock in your cloud usage, and that runs counter to your primary interest our priority, which of course is saving money first and foremost.

Cloud providers will likely offer a variety of discount options (e.g., reserved instances, enterprise agreements, and savings plans) but with them comes a requirement that you make contractual commitments to use certain types and levels of cloud use over a set time period. Signing up for commitments that lock you into unoptimized or wasted cloud expenditure isn’t going to be beneficial, but many people look past this and only focus on the here and now of getting good looking discounts.

A better approach is to start with a thorough assessment that evaluates all areas where you could save on cloud spending.

Understanding potential adjustments you can make in advance of accepting discounts enables you to pinpoint where to optimize your cloud usage and determine what levels of commitment to make in order to receive discounts.

  1. Pick Low-Hanging Fruit First

Ensure you’re looking over everything you can, including whether or not there are optimizations that are available to you. Examples of this can be getting rid of idle resources, making cuts to overall resources based on working efficiencies and / or actual needs, and eliminating wasted PaaS services.

Other points you may want to consider are de-provisioning unused storage; shutting down instances after hours, or finding newer, lower-cost instances.

What this does is help you identify ‘low-hanging fruit’ like idle resources and unused storage that can be eliminated without any concerns for creating shortcomings elsewhere. Try to make it all part of a comprehensive optimization plan that clearly identifies the appropriate levels of usage and spend once the optimizations are complete.

  1. Determine how Software Licenses Contribute to Overall Cloud Costs

It’s fairly common to find that traditional software license costs are contributing to the costs of applications running in the cloud in a very big way. Optimizing license use is an important part of cloud cost optimization.

If it’s possible, one of the best things you can do is bring your own license (BYOL) to the cloud and enjoy significant savings as a result of it. One good example is how the Azure Hybrid Benefit can provide 45% savings on virtual machines running Microsoft Windows or SQL Server in the Azure cloud. Another example will be if license restrictions on Oracle Database may make it more costly to run in certain clouds.

It’s good to have a solid understanding of what licenses are being used in the cloud, plus the relevant use rights or entitlements that go along with them. Another consideration for you is the cost implications that should be weighed with any cloud cost optimization initiative.

  1. Be Choosy with your Discounts

So after you’ve made your assessments and identified doable optimizations, you can now implement a strategy to leverage cloud discounts to your maximum advantage. First consider how your cloud usage may vary in the future. This can include changes in cloud providers, regions, instance types, or a shift from raw VMs to PaaS services. Only commit to a level of cloud usage that will allow to stay well positioned with expenses even if unexpected changes occur.

Also be sure to avoid making commitments that cover 100% of your cloud spend. The reason for this is that doing so locks you in should your cloud use change, as it often does. A better move is to identify a ‘coverage level’ that’s more realistically lined up with your strategic initiatives, your plans to decrease or increase cloud usage with a provider, and any allowances you have wiggle room for in the event of unexpected changes.

Cloud cost optimization is going to be an ongoing process, and not something that’s a one-time fix that can be relied on going forward. That may be the most important takeaway of all from everything that we’ve shared with you here today.

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