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Managing cloud costs

Managing cloud costs
Managing cloud costs

Cloud-based solutions can offer your business a way to provide a scalable and reliable IT infrastructure that supports the company’s development and growth. But it needs to be actively managed to control potential hidden costs (and it can be harder to ensure cloud spending is actually driving growth).


Cloud helps businesses to ensure business continuity by guaranteeing backup solutions and reliable disaster recovery, which would otherwise be costly and time-consuming to manage on-premise. The ability to gain quick access to data after a failure results in less downtime and saves the business time and money.

But, for business to get full value from the cloud, it needs a cost-efficient and scalable infrastructure in place – one that constantly adapts to business needs and that doesn’t cost a fortune in the process. Cloud-based solutions also reduce IT management overheads because the organisation can use a pay-as-you-go model, only paying for what it uses. This allows the business to scale more efficiently.


Tackling the rising cost of cloud

There’s been a rise in cloud costs as more businesses adopt the technology. This is contrary to what you might expect from a technology that is often considered as a means to reduce technology costs in an organisation, rather than increase them.

It can be hard for individual businesses to manage as costs are often extremely difficult to track (and things like undetected architecture mistakes often account for a significant increase in cloud costs). So, it’s not uncommon to see businesses left with higher than predicted costs to get the same value from the technology.

But, where do these costs come from? Well, for one, unexpected costs could come from misjudging the organisation’s IT infrastructure requirements. The business could over-estimate the cloud resources it needs, and some of that stays idle – contributing to the cost but not the value. Conversely, if the business’ resources are handling a higher capacity than it expected, it will see an increase in the cost of managing the excess.

Then there are hidden costs that drain the company of resources, often without people realising what’s happening. These include:

Data transfer fees. Businesses often don’t account for the cost of transferring data. (Amazon Web Services (AWS) and other major cloud providers have fees associated with data transfer either between AWS and the internet or between multiple cloud services.) These transfer costs can add up quickly.

Fluctuations in traffic demands. Another thing to consider is if the business requires an  infrastructure that can cope with enormous spikes in outbound traffic from time to time. Having a system that can manage these demands will dramatically increase the business’ costs.

The need to adjust infrastructure needs. Businesses also often try to adjust their infrastructure needs according to the executable code, which usually incurs higher costs.

Dealing with undiscovered flaws in the code. These flaws can lead to additional unexpected costs. For example, when inefficient calculations are used, the organisation can end up using more intensive algorithms than it really needs, which costs the business more money. Businesses should focus on improving the application code itself, which will lead to more predictable costs and cost-efficient applications.

How can businesses reduce the cost of cloud?

Visibility and optimisation are key factors in monitoring cloud resource usage and reducing costs. Billing information needs to be transparent. An invoice isn’t enough – costs should be categorised by service, so the organisation can identify exactly where the cost is going. That spending can then be tied back to a team or project, which gives greater visibility into organisational structure and means it can track what resources are being used by various teams.

Detailed, service-based cost information means organisations can evaluate what they are spending where, identify where resources should be reduced or increased, and optimise the service (and associated costs). 

Businesses also must ensure that each cloud service is right-sized for the applications running on it. One advantage of working with the major cloud service providers is that they offer various billing alarms, which businesses can configure to warn them of unexpected usage or unpredicted cost spikes.

Knowing what services and resources the organisation needs and adjusting them to the needs of the business is really important. When it comes to data storage, organisations must ensure that data is stored using the best solution for their specific needs (for example, if the business needs to access data regularly, it will want to ensure the storage system it chooses lets it do that efficiently, otherwise you risk wasting additional resources on gaining access). Amazon Web Services (and other providers) let their clients configure different lifecycle rules for their stored data, which means organisations can lower storage costs based on how often people need access to the data (and dependent on its size).

Organisations should also look at implementing suitable scaling solutions that let the business adapt its infrastructure to spikes in internet traffic without increasing costs. For example, constant retrieval of stored files is subject to data transfer fees, which could drastically increase cloud costs. A great optimisation solution would be to use a CDN (Content Delivery Network), caching static data – this could significantly reduce the costs of transferring data.

While cloud technology can save organisations significant time, money and resources, it is important not to underestimate the need to find the right services for the business, and implement and manage the technology well.

To see the full benefit of cloud – and get the most value from it – the most important thing for organisations to is to do is have a constant process for monitoring cloud performance – cloud implementation isn’t a one-off project. Cloud services need regular management, review, and adjustment across every part of the business. It is by monitoring how the business uses cloud and making ongoing changes as needed, that organisations can avoid unexpected cloud costs.If your organisation has not conducted a review of its cloud services in a while, it is a good idea to start reviewing the situation – and making potential savings – now.