In the post-pandemic era, multi-cloud deployments have replaced on-premises deployments as the norm in many enterprises. More and more enterprises migrate their data and applications to the cloud. The cloud promises to lower IT costs and deliver efficiency and scale effortlessly. But this has not always been the case. As enterprises migrate to the cloud blindly, costs often get out of control. A recent Gartner report estimates that enterprises waste about 70% of their cloud costs. Here are five simple ways for cloud cost optimization that can ensure your cloud-related costs do not exceed the budget.

1. Devise a cloud strategy

Many enterprises migrate their resources to the cloud without a strategy. They subscribe to the cloud taking the vendor’s claims at face value. There is no rulebook for a perfect strategy. The best strategy depends on the specific enterprise needs and circumstances. But as general guidelines:

• Evaluate the products and services offered by all providers. Choose a provider who offers cloud-native architecture that suits the business workload of the enterprise.
• Migration to the cloud is a long-term game. Do not migrate workloads to the cloud blindly. Prioritize workloads that get the most significant benefits through cloud migration.
• Manage resistance to change. The workforce resists cloud migration if the leaders do not communicate and demonstrate the benefits of the exercise.
• Sync the cloud architecture with business requirements. Use application workflows and relationships to reduce data hops across cloud boundaries.
• Tier and classify data before moving data between platforms. Segregate data across multi-cloud platforms to serve local applications and systems. Unnecessary transfers and replicating data across cloud platforms add to the costs. Such costs accumulate and become a substantial amount over time. 

Here are five further steps to devise an effective cloud strategy.

2. Identify and remove unused and unattached resources

The ability to ramp resources up and down on demand is one of the key cloud advantages. But this gives a cost-benefit only when the business manages the utilization effectively.

The core concept of the cloud is users’ paying only for the resources used. But many service providers charge customers for the resources ordered, regardless of usage. Complex multi-cloud deployment makes costs opaque and hard to track. Also, the fluid and decentralized nature of cloud operations make tracking expenses complex. For instance, an administrator may spin up a temporary server for an ad hoc function and forget to turn it off after work completion. 

• Monitor and manage cloud usage proactively. Many customers inadvertently deploy more resources than needed within Azure or AWS and end up paying huge amounts. Shed unneeded resources. The most significant advantage of the cloud is easy scalability. Enterprises can scale up extra resources as and when needed. Use auto-scaling, load balancing, and on-demand capabilities to scale up capacity when required. Opt for service providers that allow such easy scale-up and scale-down.
• Deploy rightsizing tools to shed unneeded resources. Optimize the size of the server, memory, database, bandwidth, storage, and other resources. Rightsizing saves costs and ensures peak performance.

3. Monitor resources proactively 

Many enterprises do not monitor their cloud deployments proactively. Processes run inefficiently, generating considerable waste. For instance, keeping idle resources running is wasteful. Plugging such resources delivers significant cost savings. An idle computing instance might have a CPU utilization level of 1% to 5% but will still attract billing of 100% of that computing instance.

• Identify and optimize low-utilization instances. Consolidate computing jobs into fewer instances.
• Use heat maps to shut down idle resources. Heatmaps are visual tools that display the peaks and valleys in computing demand. Such insights help to put in place start and stop cut-offs for different resources. For instance, use the insights from heatmaps to identify and shut down specific resources during times of non-usage. Automate such instances to eliminate errors and optimize costs.

4. Seek the best offers

Research the offers from various cloud providers. But do not go with the cheapest price. Consider the value on offer and also the reliability of the provider. 

• Take hidden costs into account. The total cloud costs depend on network traffic, virtual machine instances, storage, software licenses, training and support, web services, and other variables. Consider the costs of all these variables. Ensure there are no hidden charges for such variables in the cloud providers’ pricing.
• Compare costs to arbitrage services across providers. For instance, one provider may offer less expensive elastic storage. But another provider may have cheaper CPU pricing. Also, consider the total package on offer, including any bundled offers. It may even be more cost-effective to retain an existing internal environment sometimes.
• Invest in Reserved Instances (RIs) to get discounts from cloud service providers. RIs are resources committed upfront. Identify future demand based on a thorough analysis of usage patterns and expected demands. Make the suitable trade-off between instant scale-up and purchasing RIs.
• Look out for Spot Instances. Spot instances are limited validity resources available through auctions for immediate use. At times, spot instances are more cost-effective than normal scale-up. The trick is to be on the lookout constantly.

5. Make trade-offs between multi-cloud and single-vendor approach

Many enterprises opt for a multi-cloud model to avoid vendor lock-in and get the best prices. Such an approach has its benefits. But it also comes with several downsides. The business may:

• Lose out on volume discounts. For instance, a business may spend $400,000 on AWS, another $400,000 on Azure, and $300,000 on the Google Cloud Platform. In the process, they miss out on the $1 million tiers with any one vendor, which could have fetched a preferred status and substantial discounts. 
• Incur considerable administrative hassles that lead to massive inefficiencies.
• Incur hidden costs such as network traffic expenses between clouds and training the workforce on multiple clouds.

Factor in such costs and make the suitable trade-off between a multi-cloud strategy and sticking with a single vendor.

Effective cloud cost optimization identifies mismanaged resources, eliminates waste, and rightsizes computing services. Such cloud cost management is a continuous, ongoing initiative. Limiting it to a one-time activity will be a wasteful endeavor, as the dynamic environment will soon overwhelm the system.