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Cost optimisation in the cloud: What do you need to know?

(Image credit: Image source: Shutterstock/bluebay)

Cloud technology and the multiple platforms available today means that pretty much everything is run in the cloud these days. With the promise to drive business agility while also reducing costs, most enterprises have migrated to the cloud in large numbers. And whilst it’s true to say that cloud infrastructures offer new features that expand their capabilities, consuming cloud services can create a host of new problems - not least of all having to manage complicated bills reflecting differing global permutations.

Indeed, many enterprises are using a business management discipline and analytics software (FinOps) that assists in calculating the costs of public cloud services provided by various vendors. In this way, enterprises can better plan, budget and forecast their spending requirements for cloud consumption. With any anticipated move into the cloud, the real challenge lies in creating an environment that is both effective and efficient, especially in terms of setup and running costs.

With the well-known cloud offerings from the likes of Amazon Web Services or Google Cloud for example, the approach to cloud cost optimisation can be looked at from a number of angles, irrespective of the service chosen. Here are some considerations that will help you to understand the factors involved in optimising your cloud costs.

Cost variables

Data Transfer: The cost of transferring data into your cloud is usually free. But transferring it out is another matter. So, in the same way you should design single-cloud systems to minimise the cost of internal data transfers, you should also aim for a cost-efficient multi-cloud architecture.

First, you’ll need to be mindful that outbound network charges vary from vendor to vendor. And also that, at individual vendor level, the cost of data transfer between different cloud regions varies from geographical region to region. For example, Google Cloud Platform charges far less for data transfers between its regions in the US than elsewhere in the world. Similarly, Amazon users pay lower rates for transfers between US East and US West than between any other two regions. In order to achieve the best balance between cost and performance, it pays to be strategic when selecting regions across your multi cloud.

Compute and Storage: Each cloud vendor offers a range of different instance types and storage services aimed at different use cases, cost requirements and performance expectations. So finding the best fit for your workloads can be a complex challenge—all the more so when comparing resources across several clouds. On top of that, pricing structures vary between vendors, where like-for-like resources may be charged differently. Cost comparisons can get particularly difficult when weighing up your storage options. Depending on the nature of the service, charges could be based on several factors, such as the number of read and write requests, the amount of data you transfer out of storage and the amount of capacity you provision. Don’t forget that vendors tend to structure their charges into pricing tiers, where you pay lower rates at higher levels of resource consumption. So, on the one hand a particular vendor is a better choice when your capacity requirements are low, but that same vendor becomes pricier as your applications scale.


Scaling is one of the most important components of cloud cost management. Right Sizing instances, or choosing the correct instance sizes based on your actual application utilisation, is one of the easiest ways to reduce cloud costs without affecting performance in any way. There are also some cost management strategies, like Reserved Instance (RI) purchases, that take away some of the ability to scale in or down, because you’re committing to using a certain amount and type of resources for one to three years. When you’re looking for ways to reduce costs, it’s important to understand your current usage patterns and utilisation rates to make the best decisions about how to strike a balance between total scaling flexibility and cost management strategies like Reserved Instance purchases.

Reserved Instances (RIs)

AWS Reserved Instances, Azure Reserved VM Instances, and Google Cloud Committed Use Discounts take the ephemeral out of cloud resources, allowing you to estimate up front what you’re going to use. This also entitles you to steep discounts for pre-planning, which ends up as a great financial incentive. Most cloud cost optimisations, erroneously, begin and end here—providing you and your organisation with a less than optimal solution. Resources to estimate RI purchases are available through cloud providers directly and through 3rd party optimisation tools. There are different tools in the market, including those provided by the cloud providers, which provide a clear picture into where to purchase RI’s based on your current cloud use over a number of months and will help you manage your RI lifecycle over time.

The multi-cloud environment is already a reality for most big business. However, cloud is not a one-size-fits-all approach and, with all the various offerings, from public to private to hybrid and everything in between, enterprises need to look at everything that affects doing business in this dynamic and developing environment.

Yair Green, CTO, GlobalDots

Yair Green is the CTO of GlobalDots, and a Cloud, Security and Web Performance Evangelist.