Businesses worldwide are experiencing cloud overspending. As cloud costs become more opaque and challenging to track accurately, bills are rising. Adding to this problem is the “pay as you go” model, which charges you for what you use. In theory, this is a good option for businesses that aren’t sure about what they need. However, without careful tracking and optimisation, costs can quickly spiral out of control.
Cloud Overspending in Numbers
As many as 49% of businesses find it hard to keep cloud costs under control, and 40% overrun their cloud budgets by as much as 40%. With IT budgets shrinking, decision-makers are searching for ways to optimise cloud costs.
While the cloud promises a host of hard-to-resist benefits—including speed, efficiency, and agility—experiences are being soured by overspending. The good news is there are steps you can take to limit cloud overspending. But before we dive into these strategies, let’s explore some of the most common reasons for cloud overspending.
Cloud Overspending: Common Causes
We’ve established that cloud overspending is common, but what are the main reasons for cloud projects going over budget?
Minimal or no cloud spending oversight
It might be that company leaders simply lack sufficient oversight into the amount spent and what it’s spent on. Leaders have other priorities, so tasks like this can sometimes fall by the wayside. Getting in control of cloud spending means assigning someone to act as the cloud spending guardian, properly analysing cloud bills, implementing cost management tools, and enforcing a tagging system to track costs back to teams and projects.
Unexpected usage
Sometimes, companies unintentionally become victims of their own success. Here’s what happens: as more cloud projects come up, budget estimates for resources quickly climb. Because the cloud projects are delivering value, it doesn’t make sense to limit them. However, those handling the cloud budget will naturally feel nervous at the prospect of more costs they hadn’t planned for previously.
Overestimating usage
Developers sometimes overestimate resource needs, leading to oversized and underutilised instances. For example, abandoned test environments or resources may be left running when they shouldn’t, contributing to climbing cloud costs.
Lack of commitment
Committing to a service for a long time tends to bring attractive cost savings. For example, you can secure discounts from cloud providers by committing to reserved instances or savings plans for several years.
However, the costs start to climb when you opt for on-demand pricing. This pricing method has its benefits for those who need to scale up and down depending on workload but makes accurate budgeting challenging.
Overestimation of production headroom
If autoscaling hasn’t been implemented for applications that scale horizontally, or if they’ve overestimated the amount of production headroom an application needs, costs can quickly climb.
Design choices
When designing applications, cost considerations might not be high enough on the priorities list. As a result, some design choices and application features may make a solution unexpectedly expensive. Poorly written code not only wastes infrastructure resources but also developer time, driving up cloud costs and slowing progress.
Cloud Cost Optimisation Strategies
The reasons above don’t offer a complete picture of all the causes of cloud overspending, but they do highlight the need for solutions. So, what are your options in terms of cloud cost optimisation strategies?
Understand your cloud bill
First things first: you need to have a clear picture of where the main costs are coming from. Rather than focusing on the grand total, look at the different line items to determine if they are unusually costly, as they could be areas ripe for cost savings.
Focus on governance
Establishing clear cloud governance provides much-needed accountability and budget control. If you haven’t already, assign cost ownership to a particular team or individual and implement a tagging system to help you efficiently track spending on different projects.
Ensure resource efficiency
Make sure that resources are being used properly. Underused cloud resources can quickly drain your budget, so setting up cloud monitoring tools to track key metrics, such as disk, CPU, bandwidth, and memory usage, will help you find areas that require downsizing or, in some cases, removal.
Additionally, it pays to rightsize your cloud computing resources to ensure they match your current needs. AWS offers over 300 instance types suited for various workloads—you can see why choosing the incorrect size occurs regularly! Rightsizing your compute resources allows you to save money on idle compute resources.
Implement cost control measures
Proactive cloud cost management is vital to avoid nasty billing surprises. Utilising cost management tools, either through your cloud provider or a third-party provider, allows you to set budget alerts, automate aspects of cloud optimisation and, ultimately, create a culture of cost awareness within your company.
Choose a cloud provider with predictable pricing
To ensure your cloud costs don’t spiral out of control, you could consider opting for more predictable pricing plans. For example, AWS offers Savings Plans that are considerably lower in price than on-demand plans.
Explore autoscaling with Kubernetes
If manually managing scalability is leading to overprovisioning and high costs, autoscaling will benefit you. Autoscaling allows you to adjust the quantity of computing resources dynamically based on usage. The ideal tool for enabling autoscaling is Kubernetes, a popular open-source container orchestration tool.
AWS and Cloud Cost Optimisation
Migrating to AWS from an alternative cloud provider or optimising your existing AWS setup may unlock considerable cost savings for your business. Due to its granular billing, pricing flexibility, in-built cost management tools and scalability options, AWS is a popular cloud provider for enterprises in various sectors, including financial services, healthcare and manufacturing. However, without the right expertise, you may find yourself racking up unnecessary costs.
The Evolvere Technologies team is here to help. As your AWS partner, we provide you with bespoke AWS infrastructure solutions to meet your unique needs. Whether you’re an emerging fintech company or a healthcare provider, our deep expertise allows you to get the most out of AWS while optimising cloud costs.
Get in touch with our AWS experts today to start your AWS journey or optimise your current setup.