Article Cost Management January 20, 2021

Cloud Cost Optimization: 7 Best Practices For Reducing Your Cloud Bills

What is Cloud Cost Optimization?

Cloud cost optimization is the process of reducing your overall cloud spend by identifying mismanaged resources, eliminating waste, reserving capacity for higher discounts, and Right Sizing computing services to scale.

The cloud offers organizations unlimited scalability and lower IT costs by only charging for the resources you use.  But the truth about Amazon Web Services (AWS) pricing and Microsoft Azure pricing is that cloud customers are charged for the resources they order, whether they use them or not. In their recent report, How to Identify Solutions for Managing Costs in Public Cloud IaaS, Gartner analysts Brandon Medford and Craig Lowery estimate that as much as 70% of cloud costs are wasted. Fortunately, there are many best practices for cloud cost optimization.


7 Cloud Cost Optimization Best Practices


1. Find Unused or Unattached Resources


The easiest way to optimize cloud costs is to look for unused or unattached resources. Often an administrator or developer might “spin up” a temporary server to perform a function, and forget to turn it off when the job is done. In another common use case, the administrator may forget to remove storage attached to instances they terminate. This happens frequently in IT departments across the company. The result is that an organization’s AWS bills and Azure bills will include charges for resources they once purchased, but are no longer using. A cloud cost optimization strategy should start by identifying unused and completely unattached resources and removing them.


2. Identify and Consolidate Idle Resources

The next step in optimizing cloud computing costs is to address idle resources. An idle computing instance might have a CPU utilization level of 1-5%. When an enterprise is billed for 100% of that computing instance, it is a significant waste. A key cloud cost optimization strategy would be to identify such instances and consolidate computing jobs onto fewer instances. In the days of data centers, administrators often wanted to operate at low utilization so they would have headroom for a spike in traffic or a busy season. It’s difficult, expensive and inefficient to add new resources in the data center. Instead, the cloud offers autoscaling, load balancing, and on-demand capabilities that allow you to scale up your computing power at any time.


3. Utilize Heatmaps

Heatmaps are important mechanisms for cloud cost optimization. A heatmap is a visual tool showing peaks and valleys in computing demand. This information can be valuable in establishing start and stop times to reduce costs. For example, heatmaps can indicate whether development servers can be safely shut down on weekends. While this could be done manually, a better option is to leverage automation to schedule instances to start and stop, optimizing costs.


4. Right Size Computing Services

Right Sizing is the process of analyzing computing services and modifying them to the most efficient size. According to Gartner’s Nik Simpson, in his Picking the Right AWS EC2 Instance for Your Workload Migration report, it’s difficult to size instances correctly when cloud administrators have more than 1.7 million possible combinations to choose from. In addition to server sizes, there are options for servers optimized for memory, database, computing, graphics, storage capacity, throughput, and more. Right Sizing tools can also recommend changes across instance families if necessary. Right Sizing does more than simply reducing cloud costs, it also helps with cloud optimization, which means achieving peak performance from the resources you are paying for.


5. Invest in AWS Reserved Instances (RIs) or Azure Reserved VM Instances (RIs)

Enterprises committed to the cloud for the long-term should invest in RIs. These are larger discounts based on upfront payment and time commitment. RI savings can reach up to 75%, so this is a must for cloud cost optimization. Since RIs can be purchased for one or three years, it is important to analyze your past usage and properly prepare for the future. To purchase RIs, see Microsoft’s Azure Reserved VM Instances (RIs) purchasing guide or follow instructions in the AWS Management Console.


6. Take Advantage of Spot Instances

Spot Instances are very different than RIs, but they can help you save more on your AWS spend or Azure spend. Spot Instances are available for auction and, if the price is right, can be purchased for immediate use. However, opportunities to buy Spot Instances can go away quickly. That means they are best suited for particular computing cases like batch jobs and jobs that can be terminated quickly. Jobs like this are common in large organizations, so Spot Instances should be part of all cloud cost optimization strategies.


7. Consider Multi-Cloud vs. Single Cloud

Some enterprises deliberately seek out multi-cloud solutions to avoid vendor lock-in. While this is a valid strategy for increasing availability and uptime, these organizations may risk losing potential volume discounts by a single cloud vendor. For example, if a company spends $500,000 on AWS + $300,000 on Azure + $200,000 on Google Cloud Platform, they could miss out on reaching a $1 million tier with one vendor. The value of that $1 million tier may be substantial discounts on overall cloud spend, as well as preferred status with that particular vendor. Plus, the ability to save money with a multi-cloud strategy could be outweighed by the administrative hassles of switching between platforms, paying for network traffic between clouds, and training staff on multiple clouds.



The cloud holds great potential. The promise of saving money using the cloud can be achieved, as long as attention is paid to cloud cost optimization.


Next Steps

Implementing a multi-cloud strategy doesn’t have to be complicated. With comprehensive cloud management by CloudCheckr, you can easily switch between multiple cloud environments in one dashboard. More than 550+ Best Practice Checks for security, compliance, and cost management will help optimize your workloads and alert you of any vulnerabilities. Try CloudCheckr free for 14-days or sign up for a live 30-minute demo today.



Todd Bernhard
Todd Bernhard is a Product Marketing Director at CloudCheckr. He has earned his AWS Solutions Architect Associate, AWS Certified Cloud Practitioner, Microsoft Azure Fundamentals, and Google Cloud G-Suite certifications. He has been administering, teaching and developing on Unix systems since 1984 including 16 years at Sun Microsystems, now part of Oracle. In 2010, Todd founded the award-winning app development firm This photo is the last known image of him wearing a tie!
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