7 Ways to Improve Your Cloud ROI

How to cut down cloud costs and increase ROI

The desire to decrease cloud expenses, as well as optimize the cost of the cloud architecture is reasonable – all the companies are seeking ways to improve their productivity and achieve cost savings for the sake of further development and innovation. 

Major cloud vendors like Azure (Microsoft) and AWS (Amazon Web Services) offer various cost-saving practices that cannot be used by the companies running on-premise architectures and data centers. 

However, to benefit from these cost-efficient cloud pricing models, the organizations should pay closer attention to resource usage, DevOps department decisions (as they’re responsible for cloud costs too), and long-term commitments such as Reserved Instances or Savings Plans. 

Without proper cloud asset management companies receive huge cloud bills and cannot enjoy maximum return on investment (ROI). In this article, we’re going to discuss 7 ways to cut down cloud expenses and improve your cloud return on investment.

1. Take resource purchase seriously

A lot of companies prefer on-demand pricing which is more flexible regarding cloud management. However, there are options that are more appealing to many businesses. For instance, Amazon, Google, and Microsoft provide their users with large discounts (up to 72%) on EC2 instances or VMs in return for a long-term commitment. Let’s examine the most popular of them.

Reserved Instances (RIs)

AWS Reserved Instances and Azure Reserved VM Instances are not physical instances, but billing discounts applied to the use of on-demand instances. Investing in Reserved Instances, you pay for the entire term you committed to (1 year or 3 years) regardless of actual use and in return, you get a discount based on time commitment. 

Nevertheless, it’s recommended to look before you leap – analyze the current cloud utilization rates and decide whether this strategy is good for the business. Various cloud management platforms like Binadox can facilitate the monitoring and tracking processes for IT and Finance departments. These platforms save companies time and money as they require no additional specialists for completing this task.  

Savings Plans

Like RIs, Amazon Savings Plans pricing allows users to get discounts up to 72% compared to the on-demand pricing. However, unlike Reserved Instances, AWS Savings Plans are more flexible regarding the ways these savings can be applied across unified bills. 

It’s worth mentioning that the users that purchased Standard RIs can sell them on the Amazon Web Services EC2 Reserved Instance Marketplace. It’s a useful practice in case the company has overprovisioned resources. However, there is no such option for Savings Plans. So, the companies opting to commit to Savings Plans usage should make sure that the proper planning strategy is implemented in their organization. 

Spot Instances

AWS Spot Instances and Spot VMs in Azure and Google are specialized instances that give users the opportunity to access and utilize unused instance capacity, paying less than for the on-demand instances. Such instances offer users a discount of up to 90%. 

While Spot Instances pricing seems to be more profitable than the standard on-demand one, Spot Instances aren’t the most reliable option. The thing is: the cloud provider can reclaim the Spot Instances you’re using at any time. If the cloud vendor needs them, they send users the notification that the Spot Instances will be taken back soon. It may result in downtime and issues connected to the customers’ satisfaction, performance failures, and money loss.

This way, Spot Instances aren’t the best fit for companies with critical workloads. So, it’s recommended to identify whether your company can tolerate the downtimes or not before committing to the Spot Instances deployment. 

2. Size instances properly

To make the most out of cloud investments, business owners should do profound analytical work and choose the instance type that will serve best for their company. In other words, organizations need to have greater visibility of how much computing power and memory a specific application uses. It helps minimize the possibility of idle and underutilized instances draining the company’s budget. 

As a rule of thumb, idle and underutilized instances are supposed to be rightsized. Still rightsizing may turn out to be a challenging task, as it involves sophisticated analytical work for identifying what instances should be selected instead. 

Cloud cost management platform Binadox simplifies the rightsizing process and sends its users recommendations on what instances better match the current workload. Additionally, Binadox presents the information on the size and cost of the new instance that frees the IT and Financial departments from additional manual search. 

3. Eliminate unused resources

Cloud services deployment is beneficial for many companies, as they are charged on an on-demand basis. However, those who deploy cloud products, pay not only for the used resources but for all the ORDERED ones. This way, companies pay for the assets whether they’re using them or not. 

The best decision in this situation is to get rid of all the dormant resources: idle instances, old snapshots, unused elastic IPs, and so on. For instance, you can delete unassociated EBS snapshots, as they cost little separately, but in total make up large expenses. 

Cloud management tools can help detect inactive resources, and either automatically remove them (with the help of automation rules, for example) or highlight them for manual review and notify you about their existence. Also, cloud management platforms can facilitate the tracking of these resources so that they are not left unnoticed.

4. Optimize storage

Storage can be scaled and rightsized like the instances. So, it’s recommended to observe your storage solutions on a regular basis. Additionally, you should consider other storage solutions offered by cloud providers to use the most beneficial and profitable ones.

You’d better identify the frequency and speed with which you’ll need to retrieve your data. In the case of using the standard S3 buckets for archival storage, you might benefit from moving that data to “cold” storage options like Glacier, as it costs less than the “hot” storage. Object expiration and transitions to Amazon S3 Reduced Redundancy Storage (RRS) and Amazon S3 Glacier can significantly reduce the total cost of S3. 

5. Track data transfer costs 

Inbound data transfers and transferring data to the cloud are typically free. However, outbound transfers (from the cloud) can cost you an arm and a leg. The charges depend on the region. To find out more about the data transfer cost specifications, read our previous article. 

By having a full view of these types of charges, you can decide where to host your data. You can also try grouping resources within regions to avoid extra expenses. Keep an eye on not only what you have, but where you have it, so you will not waste a huge amount of money on data transfer. 

6. Monitor and analyze resources utilization

A lack of visibility of your cloud assets can lead to resource redundancy and unreasonable spending. In this case, the more doesn’t mean the better. 

You cannot analyze what you cannot monitor. First of all, you need to understand whether you’re using your resources to the fullest extent or not, and if you aren’t – draw some conclusions for future resource shopping. Various monitoring tools can make your life easier, especially for those who deploy a multi-cloud or hybrid cloud architecture. 

7. Use cloud cost optimization solutions

In order to understand whether your strategy is effective, you should track your costs and realize your cloud resource usage patterns. A cloud management platform is an efficient tool for day-to-day task management and cutting down cloud costs. Also, CMP can help you avoid cloud resources sprawl, budget waste, and letting some kind of security threats occur. 

Binadox provides its users with all cost data gathered in one place, helps to see the resources utilization rates, offers cost-saving features, and allows companies to get the most out of their cloud budget.

Want to improve your cloud return on investment?

Sign up for a Binadox free trial and be aware of all the cost optimization opportunities. You can also book a demo to find out how to use Binadox to the fullest extent.