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According to a recent Gartner study, 86% of CEOs believe that AI can help maintain or grow company revenue. However, they may not be fully clear about how to best achieve this goal. The study suggests that CEOs are bullish on the technology’s potential, but may not have a fully baked plan for realizing its promises.
Nowadays, one of the most important goals for a CXO-level stakeholder is cloud cost management. An ample amount of time & energy is spent in first migrating workloads to the cloud and then maintaining the uncertainty of costs. If focus is placed on improving the processes & strategies of managing cloud costs, a huge part of the revenue can be maintained and further, grown to the next target.
That’s where CloudKeeper comes in.
Over the course of a decade and more, we have honed our skill set and come up with 3 automated & AI-based platforms to simplify cost management, cost allocation, chargeback, anomaly detection & much more!
In this blog, we will explore the importance of cloud cost management, compare it with cloud cost optimization, offer tips on multi-cloud management, and introduce automated platforms to optimize costs. Let’s get started!
Why is Cloud Cost Management so important for businesses?
With the convenience and flexibility that cloud platforms offer, there is a growing need to keep track of cloud-related expenses. Managing these costs effectively is crucial for maximizing the value of cloud investments.
As businesses increasingly migrate their operations to the cloud, understanding and managing cloud expenses becomes essential for financial efficiency and operational success. Here’s why cloud cost management matters:
1. Cost Control: Without proper oversight, cloud spending can spiral out of control due to factors like over-provisioning, idle resources, or unexpected usage spikes. Proper cloud cost management ensures that cloud resources align with actual needs, avoiding wasteful spending.
2. Financial Visibility: By cloud costs monitoring, businesses can gain real-time insights into how resources are being used and allocate budgets accordingly. This clear cloud cost visibility clubbed with real-time dashboards helps in making data-driven decisions that can boost profitability.
3. Improved Forecasting: Effective cloud cost management tools enable better and more accurate forecasting of future expenses, ensuring the business is prepared for growth or fluctuations without financial surprises.
4. Competitive Advantage: Organizations that manage their cloud costs well are better positioned to invest savings into innovation and other core activities, giving them a competitive edge.
Cloud Cost Management vs. Cloud Cost Optimization
While cloud cost management focuses on controlling and monitoring expenses, cloud cost optimization takes a step further by proactively finding ways to reduce costs without compromising on performance. Here’s how they differ:
Cloud Cost Management: This is about keeping track of what you’re spending and ensuring that expenses stay within the set budget. It involves monitoring usage patterns, creating detailed reports, and assigning costs to various departments. This also offers insights into where and how money is being spent on cloud resources.
Cloud Cost Optimization: Optimization goes beyond just monitoring. It uses the insights from cloud cost management to maximize business value at the lowest possible cost. It involves taking actionable steps to reduce costs, such as rightsizing instances, eliminating idle resources, and switching to more cost-effective pricing models (e.g., spot instances or reserved instances). Cost optimization is not solely about reducing expenses; it also ensures that increased costs are justified by increased business value.
Both are essential for ensuring that businesses not only stay within their cloud budgets but also maximize their return on investment (ROI) in cloud services.
Cloud cost management across multiple cloud platforms
Managing costs across multiple cloud platforms can be challenging. Here’s how you can simplify multi-cloud cost management:
1. Unified Dashboards: Use a cloud cost management tool that aggregates data from all cloud providers into a single dashboard. This provides a holistic view of expenses and avoids data silos
2. Set Governance Policies: Establish governance policies that standardize how resources are provisioned across cloud environments to prevent over-provisioning and ensure security
3. Centralized Billing: Implement a centralized billing system that consolidates cloud costs from different providers, helping to monitor and compare expenses effectively
4. Cross-Platform Automation: Automate tasks like resource provisioning, scaling, and shutdown across different cloud environments to optimize costs
5. Interoperability Considerations: Choose tools that support the interoperability of cloud services to minimize vendor lock-in and ensure flexibility in switching between providers
Learn more about picking the right kind of multi-cloud management tools here.
Cloud Cost Management Best Practices
There are multiple best practices that are referred to, quite frequently, including rightsizing resources, leveraging reserved & spot Instances, daily monitoring and tagging of resources, and more. Here are some of them explained:
1. Enable Cost Cost Monitoring & Tracking
Organize resources by applying tags or labels (e.g., by project, department, environment) to track cloud costs by categories. This provides a clear view of where resources are allocated and helps manage budgets. We should also leverage tools like Tag Editors to efficiently automate the process of tagging. Tools like AWS Config Rules or Azure Policy can enforce tag compliance, alerting teams when resources are missing tags.
Here are some tagging standards one must keep in mind for better cloud cost management:
- Identify the right tags for your resources, focusing on the specific purpose for each tag (e.g., project, department).
Collaborate with cross-functional teams to define standard tags. - Ensure consistency by standardizing tag names, avoiding duplicates, and preventing inconsistencies.
- Share and publish the tagging standards across the organization to keep everyone aligned. We should prepare internal documentation or wikis, ensuring everyone follows the same conventions.
- Apply tags to meet all necessary tracking criteria, giving you better visibility into cloud usage and costs.
Learn more about the effective tagging strategies.
2. Set Budgets and Spending Limits
Define budgets for teams, applications, or services, and monitor them regularly. Configure automated alerts to notify you when cloud spending approaches or exceeds budget thresholds. This allows for early action before unexpected costs accumulate.
For instance, you could set a budget of $10,000/month for a department and automatically receive alerts if the budget crosses 80%. This gives teams a chance to investigate and correct course before incurring more costs. You can use tools like AWS Budgets or Google Cloud’s Billing Alerts to track costs against predefined budgets and configure alerts for early warnings.
You can also sign up with cloud cost visibility platforms like CloudKeeper Lens for efficient cost allocation, chargeback, tagging, and anomaly detection. CloudKeeper stands out by combining automation with human-assisted anomaly detection to avoid alert fatigue. We only focus on analyzing genuine anomalies and usage trends.
3. Right-Size Resources
Review and adjust the allocation of resources to avoid over-provisioning or underutilization. Right-sizing resources such as compute instances, databases, and storage can significantly reduce costs.
For example, if a production database is only using 50% of allocated CPU, downgrade it to a smaller instance type. This simple action could save thousands annually.
4. Utilize Cost-Efficient Pricing Models
If workloads are predictable, consider reserved instances, savings plans, or commitment-based pricing to lower costs compared to on-demand pricing. AWS offers up to 72% discounts for Reserved Instances with one- or three-year commitments, which is ideal for steady-state applications. For flexible workloads, consider spot instances (AWS) or preemptible VMs (Google Cloud) that offer deep discounts for non-critical applications.
5. Automate and Enforce Cost Policies
Set up automation to shut down unused resources (e.g., non-production environments during off-hours). Use governance tools to enforce cost-saving policies, such as limiting the provisioning of expensive resources or enforcing the use of low-cost storage tiers. We can use tools like AWS Lambda or Azure Automation to automatically shut down idle resources during non-working hours. Implement policies in AWS Control Tower or Azure Policy to enforce the cost-saving rule.
These practices help in better cloud cost management by preventing overspending, optimizing usage, and providing insights into cloud expenditures.
While all of them work well when implemented with careful consideration, to get the maximum advantage out of cloud cost management, automation & AI needs to be incorporated. Here’s how CloudKeeper offers certain platforms to help you achieve your cost optimization goals faster than usual.
Keep Your Cloud Cost Management on the Right Track With CloudKeeper
CloudKeeper Lens: Efficient cost allocation, chargeback, tagging, and anomaly detection
This platform focuses on making cloud spend more intelligent through optimized tagging, anomaly detection, and chargeback strategies. By getting complete visibility and building smarter processes, businesses can gain deep insights into resource utilization and identify inefficiencies in real time.
Learn more about CloudKeeper Lens for AWS & Azure.
CloudKeeper Auto: Zero-Touch, AI-based AWS reservation management
CloudKeeper Auto enables zero-touch, AI-driven platforms empowering businesses to automate AWS RI management, ensuring resources are optimized at the speed of business—without manual intervention. Plus, its also offers AWS RI & Savings Plans pricing for on-demand instances and a buy-back guarantee of unused RIs & SPs.
CloudKeeper Tuner: An Automated AWS Usage Optimization & Recommendation Platform
An Automated AWS Usage Optimization & Recommendation Platform that optimizes the performance of your workloads on 50+ AWS services thereby reducing the cost of your infrastructure without compromising on performance.
The goal is continuous improvement and better business outcomes with less manual effort.
Conclusion
Cloud cost management is not just about saving money; it’s about making smarter, data-driven decisions to ensure long-term success. By implementing the right strategies and tools, businesses can unlock significant value from their cloud investments while staying within budget.
Whether you're just starting out or are already a cloud-first organization, optimizing your cloud costs should be a top priority for sustainable growth.
