Note: This article is translated from "A guide to enterprise cloud cost management – understanding and reducing costs" by Yair Green. This article clearly explains the challenges facing enterprise cloud cost management and provides solution strategies.

For enterprises, managing cloud costs has become a huge challenge. As the popularity of public cloud continues to grow, top cloud service providers like Amazon Web Services, Microsoft Azure, and Google are constantly offering more competitive prices to attract enterprises. But your cost-saving journey shouldn't stop there. Many factors can increase public cloud computing expenses, some of which are initially overlooked by IT teams. Fortunately, organizations can use intelligent cloud cost management strategies to avoid any unnecessary unexpected bills.

During the cloud adoption process, enterprises need to ensure they have appropriate cost management strategies to control spending while continuously migrating services to cloud providers. Let's examine some management strategies that can immediately reduce cloud costs.

Challenges of Managing Cloud Costs

Cloud infrastructure provides many benefits for organizations, but also brings various challenges. The benefits are obvious - scalability, controllability, security - but it's also important to understand the impact of cloud migration on organizations. A major factor causing cloud cost management challenges is the difficulty organizations face in tracking and forecasting usage. Unpredictable budget costs may be one of the biggest pain points in cloud management.

The ability to scale on demand has shifted resource procurement from the exclusive ownership of finance or procurement teams to multiple departments across IT, DevOps, and others. This democratization of procurement has raised cost awareness among more stakeholders as they are now responsible for understanding, managing, and optimizing costs.

Before migrating infrastructure to the cloud, it's important to evaluate public cloud costs. Like any IT service, public cloud also brings unexpected charges.

The first step in cloud cost management strategy is to examine the billing models of public cloud providers. Note how much storage, CPU, and memory your applications need, and which cloud instances can meet these requirements. Then, estimate the cost of these applications in the cloud. Compare your estimates with the current cost of running these applications on-premises. Due to data location and other factors, some workloads are more cost-effective on-premises.

When using multiple public cloud providers, integration and other factors may lead to unexpected costs. Think ahead and plan application deployments to understand where you might incur additional costs. Also, review your cloud bills and check access, CPU, and storage charges. Tracking spending across multiple clouds is not easy.

Before committing to a cloud vendor, you must understand your business needs and check what a vendor provides. At first glance, most vendors have similar packages and prices, but when you query them in detail, you may find, for example, that one vendor has much lower prices for certain types of workloads.

Organizations should also avoid vendor lock-in. Moving workloads from one cloud vendor to another can sometimes be difficult. Organizations sometimes pay more than necessary because they didn't do their homework in advance, and migrating applications or workloads after they go into production is very difficult.

Key Points to Reduce Cloud Costs

To reduce cloud costs, you must first be able to identify waste by discovering inefficient use of cloud resources. Cloud cost management is not a one-time process, but if you solve the core issues of wasted cloud spending and budget overruns, you can immediately save on cloud infrastructure costs.

Ensure teams can directly and intuitively understand their spending. Unless you clearly know how much you've already spent, it's easy to get carried away by irrelevant services. Determine what you have and who owns it. Tag ownership for resources and users, record cost center information and creation time, so you can understand the source of spending. This information is used to track usage through detailed billing reports.

Once you have a grasp of your spending, set budgets for each account. After establishing a baseline, you can ensure you're setting actual and realistic budgets based on actual usage. Find whitelist instance types (RDS and EC2), only allow specific types (e.g., t2.medium) or instance classes (e.g., t2-*) or fixed-size instances (e.g., *-micro, *-small, *-medium).

Prevent employees from using unapproved virtual instances from the marketplace (including software license costs), or using specific operating systems or database engines from vendors (without enterprise agreements with vendors, or costs too high to run at scale). Check which regions services run in. Service costs can vary by up to 60% per region. Therefore, you need to ensure a balance between the need to run services in a given region and the cost of doing so. You can use scheduled instance scheduling to start and stop instances during scheduled time periods. Shutting down environments at night and weekends can help you save 70% of runtime costs. Determine which environments require 24/7 availability and schedule the rest.

Perform storage lifecycle management, ensure regular backup of logs and snapshots, and backup and delete any storage volumes that are no longer used. Ensure you only use one Cloudtrail configuration and add others only when absolutely necessary. Also, ensure sandbox or trial accounts are only used for exploration purposes and run within a committed time period.

Another technical solution that helps reduce operating expenses is using containers. IT teams often use DevOps methods, and containers package applications and all their dependencies together, making them easier to deploy, manage, and/or migrate from one environment to another.

Finally, use vendor cloud cost management tools. Many organizations believe that handling these cost optimization tasks themselves requires too much time and skill. Instead, they leverage cloud cost management services from reputable vendors. Cloud cost management is one of the main pain points for organizations when migrating to the cloud. Due to the complexity of cloud infrastructure, cloud costs can sometimes be difficult to estimate.