Axle Networks Blog – Businesses are using cloud computing more and more in this era, especially to promote scalability, innovation, and agility. While adopting the cloud has many benefits, it also poses some challenges, cost management is one of them. To maximise ROI, optimise spending, and preserve financial stability, cloud cost management is essential.
Let’s take a closer look at cloud cost management, including its definition, benefits, and some of the best tools for maximising your business’s cloud usage ROI.
What is Cloud Cost Management?
Cloud cost management is the practice of understanding and evaluating the expenses involved in cloud operations to control costs and optimize spending for cloud computing services from AWS, Microsoft Azure, and Google.
It involves regulating, optimising, and monitoring cloud computing costs to ensure that organisations can make the most of their cloud investments while maintaining financial stability.
Cloud costs are influenced by a wide range of factors, not all of which are immediately apparent. Virtual machine instances, memory, storage, network traffic, web services, software licensing, training, and support are a few examples of expenses. All of these elements need to be considered in a solid cloud cost management plan.
Cloud cost management strategies include expenditure control, cost optimisation, expenditure visibility, forecasting, cost allocation, optimal resource utilisation, governance and policies, collaboration, and continuous improvement.
As more and more businesses move to cloud-based computing, cloud expenditure management is becoming more important. This is because poor cloud cost management can result in unforeseen expenditure spikes, overpaying for unused resources, or even subpar performance.
Some strategies for managing cloud costs include right-sizing, automatic scaling, power scheduling, removing unused instances, and discounting instances.
Cloud optimization is crucial for this reason. Optimising your entire cloud environment can benefit your business, not just in terms of costs. To find out more about that, read our earlier article.
Learn more: Importance of Cloud Optimisation: 4 Ways to Optimise and Best Practices
How do Cloud Pricing Models Work?
Cloud pricing models can be complex due to the variety of options and costs associated with each. Here are the most common pricing models at cloud providers:
- On-demand pricing: This is the simplest and default option at most cloud providers. Customers pay exactly for what they use. The granularity of billing can vary from one provider to another, with some charging for full hours and others down to the minute or second. This option offers the highest flexibility but is also the most expensive. It is recommended for running applications that may spike periodically or are not to be interrupted.
- Spot pricing: Spot instances allow you to bid on spare computing capacity. While spot instances can offer cost savings of up to 90%, they come with the risk of being outbid and losing the instance.
- Reserved instance pricing: Reserved instances require a long-term commitment (typically 1-3 years), but in return, they offer significant discounts compared to on-demand pricing. They are ideal for predictable workloads.
- Volume discounts or tier-based pricing: Some cloud providers offer volume discounts or tier-based pricing, where the unit price decreases as usage increases.
Each of these models has its own advantages and disadvantages, and the best choice depends on the specific needs and usage patterns of the business. It’s important to fully understand your requirements before exploring the cloud landscape.
Advantages of Cloud Cost Management.
The benefits of cloud cost management are well… Obviously, the optimisation of resource usage and cost expenses for your company’s cloud computing usage. Even with that, there are still a tonne of additional benefits to efficient cloud expenditure management. Here are several of them:
- Cost Transparency: It provides full visibility into your cloud spending. This allows businesses to track what they spend on cloud infrastructure, eliminate inefficiencies, and optimize spending.
- Waste Reduction: It helps identify and eliminate idle resources. Companies with poor IT governance often buy duplicative services and pay for resources that have long since outlived their usefulness.
- Maximise Savings: It optimises purchasing decisions and uses cloud resource costs to your advantage. An effective cloud expenditure management strategy can rein in unauthorised spending and help harness available discounts while ensuring that IT departments are budgeting efficiently.
- Cost Allocation: Often, companies are unable to decipher which departments have incurred which IT expenses. Cloud cost management allows businesses to align their cloud usage with larger organisational metrics and financial goals.
- Avoid Unpleasant Surprises: You’ll minimise waste and administrative effort, save time—and avoid unpleasant surprises when bills arrive.
5 Top Cloud Cost Management Tools
Cloud expenditure management tools can help organisations track usage, decrease waste, save time, reduce administrative effort, and avoid unexpected costs. These tools offer features like consolidated billing, access permissions, budgeting, forecasting, and pricing optimisations, allowing users to gain enhanced control and drive cost-reduction initiatives.
According to the CloudZero blog, some of the top cloud cost management tools include:
1. AWS Cloud Financial Management Tools:
AWS offers a comprehensive suite of tools to efficiently manage and monitor cloud costs, including consolidated billing, access permissions, budgeting, forecasting, and pricing optimizations.
2. Azure Cost Management + Billing
Part of Microsoft’s suite, Azure Cost Management + Billing empowers businesses to optimize their cloud investments by enhancing visibility and accountability. It offers features like cost reporting, tailored cost optimisation suggestions, and integration with Microsoft Power BI connectors and Cost Management APIs.
3. Google Cloud Platform (GCP) Cost Management
GCP provides a suite of tools for effective expenditure management, accessible through the Cloud Console. Users can access Cloud Billing Reports and Cost Tables to identify resource consumption trends and optimize their expenditures.
4. nOps
This tool helps teams save 50% or more on cloud spend by automatically selecting and scheduling the optimal compute resource at the most cost-effective price. It offers seamless integration with cloud services and charges a fraction of the savings.
5. Densify
Densify is a cloud cost management tool that offers features like idle resource discovery, commitment discount management, and automated expenditure allocation. It also presents cloud spend by product, service, and team.
You can improve your business efficiency and maximise your benefits by implementing cloud cost management and optimisation. In our previous article, we explain how this can happen.
Learn more: 5 Ways to Maximise Business Efficiency through Cloud Optimisation
Conclusion
Cloud cost management is an important aspect of cloud computing that necessitates ongoing expense monitoring, analysis, and optimisation. Understanding the fundamentals of cloud cost management, addressing common challenges, and leveraging the right tools and strategies can help businesses effectively control costs, maximise ROI, and achieve long-term success in the cloud.
Do you want to increase the effectiveness and optimise of your cloud environment?
Axle Networks Cloud Managed Services offers robust cloud management solutions tailored to your specific needs. With our team of experienced professionals, you can rest assured that your cloud-based resources and data will be protected from unauthorised access and potential security threats.
