Understanding Cloud Cost Optimization Tools

This quick guide highlights the most popular and useful resources we've uncovered for enterprises looking to remain lean, or become even leaner, on the cloud.

Christopher Tozzi, Technology Analyst

January 27, 2023

3 Min Read
Cloud on blue background showering down green binary digits.

It's common to talk about cloud cost optimization as if it's a singular process – which implies you can achieve it using just one type of tool and one technique.

But in fact, optimizing cloud spending is a multi-faceted affair. There are several different approaches to reducing cloud costs, and ideally, you'll leverage all of them to achieve the best possible balance between price and performance in your cloud environment.

This article breaks down types of cloud cost optimization tools, explaining what it does and how it contributes to the overall goal of cloud cost optimization. We'll also touch on other ways to save money in the cloud, beyond deploying specific tools.

Workload rightsizing

One of the most common causes of wasted money in the cloud is running workloads with sub-optimal resource allocations. For example, you might create a VM instance that has more memory or CPU resources assigned to it than it actually requires. You'll pay for the extra resources whether or not they are used.

Workload rightsizing addresses this challenge in order to reduce cloud spending. Using tools that can assess cloud workload configurations and compare them to actual requirements, you can find over-provisioned workloads and scale them down to the "right" size.

Related:How Securing Public Clouds and Private Data Centers Differ

Cloud resource tracking

Another common source of wasted money in cloud environments is resources that are running but do not need to be. This can happen if, for instance, developers spin up a VM instance for testing purposes but forget to shut it down.

Most cloud providers offer basic tools to help you identify such resources by searching for untagged or "unattached" resources (meaning ones that are running but are not associated with a specific workload). Some third-party vendors also offer tools designed for this purpose.

Discount opportunities

One of the simplest ways to save money in the cloud is to take advantage of discounted cloud service offerings, such as "spot" and "reserved" VM instances. 

The problem that businesses often run into, however, is that they're not sure when it's appropriate to use discounted services. Pricing discounts usually come with caveats, so they're not appropriate for all workloads. For instance, spot instances may shut down without notice, which makes them a poor choice if you need to host a Web app, but which might be fine if you are doing batch data processing and can tolerate interruptions.

To help with this challenge, some cloud cost optimization tools assess cloud workload requirements and identify which ones are good candidates for discounted services. They remove the guesswork from figuring out when it makes sense to take advantage of discounts.

Related:Sustainable Data Centers: Just How Green Is Your Cloud Migration?

Cloud billing analytics

It's no secret that cloud computing bills are complex. Most cloud resources are priced based on complicated models that include a variety of cost variables, some of which (like data egress fees) are easy to overlook. Understanding how all of your cost data adds up to the bottom line that appears on your bill can be challenging – as can determining how to find and mitigate unnecessary costs by, for instance, switching to a different pricing model.

Cloud bill analysis tools are designed for this challenge. They analyze cloud bills to surface spending patterns or financial waste that cloud admins may miss when reviewing bills on their own.

Beyond tools: Other ways to save money in the cloud

It's worth noting that financial tools are only one resource for cost optimization in the cloud.

Additional strategies that businesses can adopt include practices like negotiating enterprise agreements with cloud service providers, who will typically offer discounted rates to organizations that consume their services at large volume; or taking advantage of cloud startup programs, which offer free or discounted cloud usage credits to startup businesses.

The bottom line: Cloud cost optimization should be a multi-pronged, multi-tooled affair. There's no "one dumb trick" or one simple tool that guarantees you're spending as little as possible in the cloud.

About the Author(s)

Christopher Tozzi

Technology Analyst, Fixate.IO

Christopher Tozzi is a technology analyst with subject matter expertise in cloud computing, application development, open source software, virtualization, containers and more. He also lectures at a major university in the Albany, New York, area. His book, “For Fun and Profit: A History of the Free and Open Source Software Revolution,” was published by MIT Press.

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