Slash Your AWS/Azure Bill: 7 Cloud Cost Governance Steps

Cloud costs can quickly spiral out of control. Many organizations face unexpected spikes. This is especially true as infrastructure scales. It’s crucial to have a strategy. This strategy is called cloud cost governance. It helps manage spending effectively. Without it, you might overspend significantly. We will explore seven actionable steps. These steps can help reduce your AWS or Azure bill by up to 20%.

More than 80% of container spend is wasted on idle resources. This is a staggering figure. Furthermore, the percentage of organizations using commitment-based discounts is decreasing. These trends highlight an urgent need. Identifying and implementing cost optimization is more critical than ever. This article provides clear guidance.

Why Cloud Cost Governance Matters

Organizations adopt multi-cloud strategies for many reasons. These include data compliance. They also seek best-of-breed services. Avoiding vendor lock-in is another driver. However, managing costs across different clouds is complex. It requires a unified approach. Cloud cost governance provides this structure. It ensures spending aligns with business priorities.

According to NearshoreArticles, over 60% of cloud initiatives focus on cost optimization. This shows its importance. Yet, many companies fail. They often struggle with “cloud waste.” This waste can be nearly 30% of cloud capabilities. This is particularly common in mature organizations. They are transforming their existing infrastructure.

Common Pitfalls in Cloud Cost Management

Several factors lead to cloud cost overruns. A primary issue is the lack of clear cloud governance policies. These policies are essential for managing costs and access. Without them, spending can become unmanaged. Choosing an inappropriate pricing plan is another mistake. High-priced plans are often selected without full utilization.

Misalignment between cloud services and actual needs is also a problem. This often results in over-scaled resources. For instance, virtual machines (VMs) might be created. These VMs might only use 20% of their CPU capacity. Moreover, storing unnecessary resources contributes to waste. This includes outdated datasets or old systems. These might even be shut down for years.

Finally, a lack of flexibility can hurt. Some companies try to move existing infrastructure to the cloud. They move it exactly as it is. This approach often generates unnecessary costs. They might not be aware of available services. They might also not know the best pricing plans. Decision-makers can be surprised by additional costs. These include data transfer fees or software subscriptions.

7 Actionable Steps to Reduce Your Cloud Bill

To combat these issues, a structured approach is necessary. Here are seven actionable steps. They will help you significantly reduce your AWS or Azure bill.

1. Implement Robust Tagging Strategies

Effective tagging is the foundation of cloud cost management. It allows you to allocate costs accurately. You can track spending by project, team, or application. This visibility is crucial. Without it, identifying expensive workloads is difficult. According to CloudOptimo, tagging coverage rate is a key KPI. It enables all other cost and performance KPIs.

Use clear and consistent tags. Examples include `team: frontend` or `app: checkout`. Regularly review these tags. This helps in understanding cost shifts. It’s especially important after product updates or team changes. This granular visibility helps catch surprise expenses early.

2. Rightsize Your Resources

A significant portion of cloud waste comes from overprovisioning. This means paying for capacity you don’t use. Resource utilization rates are a vital KPI. They show how much of your compute, storage, or memory is actually used. Low utilization often indicates an opportunity to rightsize.

For example, Amazon EBS gp2 volumes are a previous-generation technology. Migrating to gp3 can reduce costs by 20%. Datadog’s Cost Recommendations feature highlights such opportunities. It can identify instances with consistently low CPU usage (e.g., below 20%). It then prompts you to downsize or configure autoscaling. This ensures you pay only for what you need.

3. Eliminate Idle and Unused Resources

Idle resources are a direct drain on your budget. These are assets that are running but not actively contributing value. Datadog’s Cost Recommendations can identify these. For AWS, this might include unnecessary load balancers or trails. For Azure, it could be unattached managed disks or idle VMs.

Regularly audit your environment. Remove any resources that are no longer needed. This includes old snapshots or unattached storage. Tools like troubleshooting retrieving data errors can sometimes uncover hidden resource issues.

4. Leverage Commitment-Based Discounts

Cloud providers offer significant savings through commitment-based discounts. These include Reserved Instances (RIs) for AWS and Savings Plans for both AWS and Azure. While many organizations are decreasing their participation, this is a missed opportunity.

Commit to a certain level of usage over a period (e.g., one or three years). In return, you receive substantial discounts. It’s crucial to accurately forecast your usage. This ensures you don’t overcommit. Tools that provide cloud spend forecast accuracy are invaluable here. This KPI helps build finance trust and prevent surprise bills.

5. Automate Resource Management

Manual management of cloud resources is prone to error and inefficiency. Automation is key to maintaining cost control. This includes autoscaling based on demand. It also involves shutting down non-production resources outside of business hours.

For instance, OptimoScheduler is a tool that can automate resource usage based on working hours. This reduces unnecessary runtime without complex scripting. Automating these processes ensures resources are only active when needed. This directly cuts down on idle resource costs.

6. Optimize Data Storage and Transfer

Storage costs can accumulate quickly. Regularly review your storage policies. Delete old or non-current versions of objects. For example, noncurrent versions of S3 objects in AWS can be identified and removed. Similarly, unattached managed disks in Azure should be cleaned up.

Data transfer costs between regions or out to the internet can also be significant. Understand your data flow. Optimize where data is stored and how it is accessed. Consider using content delivery networks (CDNs) where appropriate. Reducing unnecessary data movement can lead to substantial savings.

7. Monitor and Analyze Key Performance Indicators (KPIs)

To truly manage cloud costs, you need to track the right metrics. Key Performance Indicators (KPIs) translate complex data into actionable insights. They help you understand *why* costs are changing and *what* to do next.

According to CloudOptimo, seven KPIs are essential for cost and performance optimization:

• Cost per Service or Application: Allocates spending to specific workloads.
• Resource Utilization Rates: Shows usage versus provisioned capacity.
• Cloud Spend Forecast Accuracy: Compares budget versus actual spending.
• Rightsizing Efficiency: Measures the quality of resource resourcing decisions.
• Cost per Transaction or Request: Assesses the cost-efficiency of workloads.
• Idle Resource Costs: Quantifies wasted spend on unused assets.
• Tagging Coverage Rate: Indicates the completeness of resource tagging.

Regularly reviewing these KPIs allows for informed decision-making. It helps prevent surprise bills and ensures spending aligns with business value.

Frequently Asked Questions

By implementing these seven actionable steps, organizations can gain control over their cloud spending. This leads to significant cost reductions and a more efficient cloud infrastructure. Remember, continuous monitoring and adaptation are key to long-term success in cloud cost management.