Cloud Cost Optimization Complete Guide

Introduction to Cloud Computing:

One of the most flamboyant technological evolutions, Cloud Computing, has transformed a large part of the IT industry, changing how we engineer and deliver applications. In this data-driven age, cloud computing enabled entrepreneurs and large-scale enterprises to manage and store vital information and programs while making it accessible to all the teams involved without keeping all the files on one computer.

The impact of Cloud Computing is not only limited to data management. It also extends to other technologies like DevOps, where it empowers every step of the development life cycle, allowing applications to be built and tested on various environments effortlessly. Moreover, it promotes automation, which further reduces development time and cost. However, to ensure maximum Cloud Computing benefits, organizations need Cloud Cost Optimization that helps reduce the overall cloud spend.

Defining Cloud Cost Optimization:

For organizations that want to ensure cost-saving while diversifying and modernizing their IT operations, Cloud Cost Optimization, also known as Cloud Cost Management, is a blessing in disguise. It helps organizations investing in Cloud Computing to reduce the overall cloud spend by identifying mismanaged resources, eliminating waste, reserving capacity for higher discounts, and right-sizing computing services to scale. A highly effective process, Cloud cost optimization efficiently tackles the challenges pertaining to Cloud maintenance, governance, and other costs.

Moreover, with the help of cloud cost optimizations, organizations can find the right balance between cost and performance, and its maintenance. However, to make this possible, it is important to have complete visibility of cloud accounts and control over future deployment, As the lack of visibility and control will lead to zero accountability and governance within the process.

Furthermore, Cloud cost optimization analyzes an organization's resource usage, assigns the suitable resources for a workload, sizing them to meet the demand, and enables it to meet the necessary security and compliances in a phased manner.

Why Do We Need Cloud Cost Optimization?

It is often assumed that the main objective of Cloud Cost Optimization is to only reduce cloud spend. However, its role is not just limited to controlling cost but spans across various areas of the entire cloud operations. Hence, the reasons that make Cloud Cost Optimization critical for organizations are:

  • Transparency: A key to leveraging Cloud benefits, it helps identify the poorly managed or unutilized resources for cost optimization, security, and availability.
  • Governance: Helps maintain a compliant environment and take necessary steps to achieve continuous compliance.
  • Predictability: Helps teams be aware of Cloud consumption, performs right-sizing of the cloud resources, and configures them to scale seamlessly to achieve cloud optimization.

How to Implement Cloud Cost Optimization?

To achieve successful implementation of Cloud Cost Optimization, organizations need to follow some crucial steps. These are:

  • Analyze Cloud Cost: This involves:
    • Evaluation: Prepare a perfect cloud strategy for complete cost evaluation.
    • Billing Model: Perform a holistic comparison and assessment to determine Cloud service providers by region and service-specific costs.
    • Monitoring: Perform continuous monitoring to identify infrastructure requirements.
  • Track Wastage: Identify ideal, orphaned, and overprovisioned resources and reserved instances like load balances, unused data volumes, unused machine images, etc. to avoid wastage and prevent excessive cost expenditure.
  • Prepare a Checklist: Make sure to prepare a checklist with the following points:
    • Resource Identification.
    • Make Resources Visible.
    • Whitelist Resources.
    • Schedule Repeating Instances.
    • Manage Storage.
    • Budget Planning.
    • Region-wise Price Planning.
  • Use Cloud Management Platforms: Use cloud management platforms for multi-cloud services and resources management, life cycle management, and automating cloud resources management. This covers some key functional areas listed below:
    • Provisioning and orchestration.
    • Service request management.
    • Inventory and classification.
    • Monitoring and analytics.
    • Cost management and resource optimization.
    • Identify, security, and compliance.
    • Cloud migration.
    • Backup and disaster recovery.

Cloud Cost Optimization Challenges:

While implementing cloud cost optimization, organizations come across various challenges that make the process difficult. A few of these are:

  • Lack of Visibility: If there is no clear view of the results, it becomes difficult to realize the proposed savings. Controlling Costs: Since businesses place their resources into the most appropriate plan, region, and type based on their requirements, determining if they are paying too much for cloud workloads can become challenging.
  • Mitigating Risk: Modernizing processes with a reduced budget while controlling cloud cost can again be challenging for organizations.
  • Improper Provisioning: Ensuring proper allocation and management of cloud resources by the cloud provider becomes a challenge, which leads to unnecessary cloud costs and inefficiencies.
  • Approach towards Policies and Methodologies: Misaligned approach between the teams and departments can be a hurdle that can impact cloud cost optimization efforts.

Cloud Cost Optimization Best Practices:

The various challenges of cloud cost management and optimization can be prevented or tackled by teams if they follow certain cloud optimization best practices, like:

  • Utilize reserved instances and resources efficiently.
  • Consider microservices and serverless computing.
  • Set a cloud governance structure.
  • Ensure cloud cost and cloud value awareness.
  • Utilize heatmaps.
  • Configure autoscaling.
  • Track wastage and optimize costs.
  • Right size computing services.
  • Monitor and correct cost anomalies.
  • Opt for the right storage type.
  • Automate infrastructure rightsizing during provisioning.
  • Consider multi-cloud vs single cloud.
  • Shut down unused resources.

Though cloud cost optimization is not complicated, it does require a disciplined approach or key practices that establish efficient rightsizing habits and continuously drive insights and action through analytics and automation to reduce cloud cost. Hence, by following these practices organizations can not only manage cloud cost but also ensure maximum benefits from it.

Cloud Cost Management & Optimization Tools:

Whether your organization is using a single cloud, multi-cloud or hybrid environment, there is a possibility that you are spending money on resources that you’re not using. So, no matter what your expectations with the cloud are, today, there are numerous Cloud Cost Management and Optimization tools that can optimize your spending based on historical usage data and drive cultural change across your organization. A few of these prominent cloud optimization tools are:

  • AWS Cost Explorer: A prominent cloud cost optimization and management tool provided by Amazon Web Services (AWS), AWS Cost Explorer offers an easy-to-use interface that allows users to visualize, understand, and manage AWS costs and usage over time. It documents and manages AWS expenses through cost, usage, and Reserved Instances (RI) reports, which include details like charts, graphs, total costs, etc. It is an exceptional tool that allows an organization’s AWS costs to be more predictable.
  • Microsoft Azure Cost Management: Another significant cloud cost optimization tool, Microsoft Azure's Azure Cost Management + billing is a SaaS solution that helps organizations monitor, allocate, and optimize the cost spent in a multi-cloud environment. This is a highly efficient tool that offers features like the Microsoft subsidiary Cloudyn, which offers users insight on how to have an optimized budget to avoid overspending. With this tool, organizations can manage billing access to costs, proactively apply data analysis to the cost, identify opportunities for workload changes that can optimize your spending, and more.
  • GCP Billing: Introduced by Google in 2008, Google Cloud Platform (GCP) is a collection of cloud computing services that helps organizations configure billing on Google Cloud in a variety of ways to meet different needs. Considered to be the third biggest Cloud Service Provider (CSP), behind Amazon’s AWS and Microsoft Azure, GCP helps users understand their GCP cloud bill. It offers secure, adaptable, and savvy solutions that save money on IT staffing and allows almost instant scaling of any online platform or solution.
  • Harness Cloud Cost Management: A cloud cost management tool designed to help modern-day software companies with cloud, Harness Cṣloud Cost Management helps organizations simplify cost visibility, savings, and forecasting, allowing the team to spend less time tagging and doing analysis and more in optimizing their spend. Moreover, it offers contextually relevant information at any level of the organization, without any tagging, and gives visibility into cloud resource costs by utilized, idle, or unallocated, at hourly granularity. Its other features like anomaly detection, budgeting, and forecasting help the team avoid or head off surprises in cloud spend.
  • Apptio Cloudability: A cloud cost management tool, Cloudability by Apptio helps IT administrators get visibility into their Cloud spend and manage and optimize it. It allows them to track their public spending and help plan budgets for cloud services. It is designed to work with Amazon Web Services (AWS) public cloud, GCP, and Microsoft Azure. Moreover, it offers cost savings recommendations across workloads, including reserved instance purchasing and rightsizing. Some of its other prominent features include a customizable dashboard, alerts, daily email reports, allocations, and chargeback, among others.


When operating in Cloud, organizations need to adopt some critical methodologies like Cloud Cost Optimization to help them control cloud spend and tackle the numerous challenges it poses. In today’s rapidly changing world, ensuring cost-effective development is as crucial as agile product development and delivery.

Hence, organizations that proactively and holistically manage and optimize Cloud cost can ensure ongoing, cost-effective cloud operations, which will help them scale new heights in the business world.