More and more, today’s organizations are moving to the cloud. Multi-cloud deployments are becoming the norm with 84 percent of organizations adopting a multi-cloud strategy, according to the RightScale 2019 State of the Cloud report from Flexera. What’s more, companies plan to spend 24 percent more on public cloud in 2019 than in 2018.

It’s not hard to see why. Organizations can save 14 percent by moving to the cloud through savings in capital expenditures, software licenses, fewer IT staff and usage-based billing, according to a recent Gartner report.[1] Gartner goes on to say that, through 2020:[2]

  • 80 percent of organizations will overshoot their cloud infrastructure as a service (IaaS) budgets, due to a lack of cost optimization approaches.
  • 45 percent of organizations that perform lift-and-shift to cloud IaaS without optimization will be overprovisioned by as much as 55 percent and will overspend by 70 percent during the first 18 months.

Clearly, adopting cloud services offer powerful agility benefits. But without a plan for managing cloud costs, they can quickly spiral out of control.

Surprise, your cloud costs have gone through the roof

Examples of cloud costs gone wild run rampant. Consider these examples as reported by The Information:

  • Adobe – When Adobe moved their core software products to the cloud in 2013, making them only available to users via subscription, business quickly grew. But an Adobe development team unintentionally racked up $80,000 a day in charges for a computing job that wasn’t discovered for more than a week.
  • Pinterest – Pinterest anticipated the capacity it needed and paid in advance for instances at a cheaper rate. They didn’t anticipate the popularity of its online scrapbook, however, which users were only too eager to use. Pinterest then had to purchase additional capacity at a much higher rate, forcing them to spend $20 million more than they initially estimated.
  • Capital One – To reduce its data center real estate and become a more agile, next-generation company, Capital One ordered its workloads to be moved to the cloud, a move at odds with the typically risk-averse financial services industry. Once its legacy applications were migrated and deemed to be stable, developers hurriedly began modernizing them for greater resiliency. As a result of this change in strategy, Capital One’s cloud costs jumped 73 percent between 2017 and 2018.

While there’s no way to know whether Capital One expected a dramatic spike in its cloud costs, these examples show how quickly costs can spin out of control without appropriately managing them.

9 best practices for controlling cloud costs

No matter where organizations are in their cloud journeys, cloud cost optimization continues to be a top-rated concern, according to the Flexera/RightScale report. Certainly, as we move more and more workloads to the cloud, it’s easier to lose sight of the big picture and the associated costs. 

While the pay-as-you-go model of cloud computing brings significant opportunities for savings, it also requires new approaches to minimize waste and optimize spending. Here are some steps you can take to help control your cloud costs:

  1. Avoid a cloud-first or cloud-only mindset. Not all workloads are designed for the public hyper-scaler cloud. Designing a cloud strategy that discovers, rationalizes and defines the best landing zones by workload dependencies will yield better results than focusing solely on usage and capacity patterns.
  2. Ensure business stakeholders and projects align to clear business outcomes and KPIs. IT-led cloud migrations/adoption with no objective other than being in the cloud often fall short on business value, leading to cost overruns. Linking to business outcomes will drive proper value-to-spend analysis.
  3. Use the cost calculators offered by the major public cloud providers. These calculators allow you to compare the costs of services and choose the ones that best meet your needs—and budget.
  4. Consider lift-and-shift initiatives carefully. Most on-premise workloads are over-provisioned on capacity by approximately 50-60 percent, which is the common overspend on lift-and-shift migrations. Leverage cloud-native services and optimization initiatives to more closely align capacity to workload and quickly achieve your desired efficiencies.
  5. Efficiently provision services by scaling up or down or use auto-scaling services. Because most services offer on-demand scalability with no downtime, overprovisioning to accommodate unexpected spikes in demand or future growth can quickly result in cost overruns. Tools like AWS Auto Scaling can monitor your applications and automatically adjust capacity to maintain steady, predictable performance at the lowest possible cost. 
  6. Take advantage of lower cost, prepaid instances for known usage. Most service providers offer significant discounts for prepaid or reserved instances, sometimes up to 75 percent when compared to the costs of on-demand instances. This option provides considerable savings, particularly if capacity is known or it can be accurately predicted.
  7. Automate the ability to stop instances when they’re not being used. It’s easy to lose track of unused resources—only to “find out” about them when you get the bill. Stopping unused instances automatically can help keep costs down.
  8. Use a centralized management tool. If your organization uses multiple cloud service providers, a management tool enables you to easily track the services you’ve paid for and make adjustments as needed.
  9. Put alerts in place so you can take appropriate action, as needed.

Alternatively, consider a managed services provider who can help you optimize and manage your cloud spending and efficiently provision your cloud resources. In fact, Gartner recommends that “organizations just starting out with a cloud-first strategy consider a managed service provider (MSP) to help manage costs for at least the first couple of years, especially if a large migration or transformation is planned.”[3]

Cloud optimization and cost management services also allow you to identify instant savings opportunities with smart cost-optimization recommendations.

Logicalis:  Cloud cost optimization and management experts

An award-winning managed service provider and a leader in the IDC MarketScape: Worldwide Network Consulting Services Vendor Assessment, Logicalis partners with the major public cloud providers, including AWS, Microsoft and IBM. We use industry-leading cost optimization tools to help you cut cloud costs and ensure the ongoing efficient use of cloud resources across all business units, cloud accounts, cloud platforms and applications.

No matter where you’re at in your cloud journey, Logicalis offers services such as:

  • Cloud Placement Assessment – Get a financial analysis of your cloud options and costs before committing to a provider.
  • Cloud Optimization and Cost Management – Get recommendations to contain costs based on an assessment of your cloud usage and identification of unused and over-utilized cloud resources.

Ready to get started?  Download the Cloud Cost Optimization datasheet to learn how Logicalis can help get your cloud spending back on track.

Walt Braeger is Vice President/Cloud Practice for Logicalis US, responsible for helping to drive business transformation as organizations move to adopt third platform consumption models for their IT/business environments.

[1] “Top Ten Moves to Lower Your AWS Costs,” Gartner Research, #G00326261, 04/25/2017.

[2] “Top Ten Moves to Lower Your AWS Costs,” Gartner Research, #G00326261, 04/25/2017.

[3] “Top Ten Moves to Lower Your AWS Costs,” Gartner Research, #G00326261, 04/25/2017.