Optimising Cloud Costs: Approaching Cost Management, Governance, and Efficiency

Optimising Cloud Costs: Approaching Cost Management, Governance, and Efficiency

The benefits of cloud computing—scalability, flexibility, and reduced time to market—are often tempered by the challenges of managing and optimising cloud costs. Without proper oversight and strategic planning, organisations can see their cloud expenses rise unexpectedly, leading to budget overruns and reduced profitability.

According to a 2024 survey by Flexera, 82% of organisations cited managing cloud spend as one of their top cloud challenges, with 45% of enterprises reporting that their cloud spend exceeded budget by an average of 23%. Gartner also predicts that through 2026, 40% of companies will experience at least one major unanticipated cloud cost overrun, further highlighting the need for effective cloud cost management.

At Infostatus, we specialise in cloud cost management and optimisation, helping our clients reduce their cloud spend significantly without compromising performance, security, or operational efficiency. This article aims to highlight the benefits of ongoing cost management along with some strategies and approaches commonly used.

The Essentials of Cloud Cost Management

Effective cloud cost management begins with understanding your current cloud environment. This involves not just tracking spending but also analysing how resources are utilised, identifying waste, and ensuring that your cloud strategy aligns with business objectives. Our experience shows that organisations often overspend due to over-provisioned resources, inefficient configurations, and lack of governance. Addressing these issues can lead to substantial savings; our experience shows savings of between 20% and 60% are common after an initial cost review. These savings compound over time, freeing up cloud budget for more productive ventures!

We offers a detailed Cloud Cost Review service, customised specifically for your business and environment. The savings achieved from the review will generally pay for the cost of the report within six months or less, leaving the rest of the ongoing savings for your business to enjoy. To highlight the effectiveness of a cost review, one of our clients was spending nearly $19,000 per month on AWS services, which had nearly doubled over the course of a year. Through a comprehensive cost optimisation review, we identified opportunities to save up to $30,000 annually - an approximate 20% reduction in their AWS bill. These savings were thanks to a mixture of findings and recommendations regarding usage wastage, architecture improvements, and user behaviour.

Governance: The Backbone of Cost Control

Governance is critical to maintaining control over cloud costs. Without a structured approach, organisations may struggle with cloud sprawl, unexpected charges, and inefficiencies. Infostatus advocates for establishing a strong governance framework that includes:

• Cost review boards: A cross-functional team that meets regularly to review cloud spending, assess usage patterns, and make decisions on optimisation strategies. This proactive approach not only prevents financial surprises but also ensures that cloud resources are being used efficiently and in alignment with business goals.
• Cost monitoring and alerts: We set up customised alerts to monitor spending in real-time, allowing our clients to respond quickly to anomalies.
• Tagging and cost allocation: Implementing a robust tagging strategy is essential for effective cost management. By tagging resources with key identifiers such as project names, departments, or environments, organisations can gain deeper insights into their cloud spending. This enables more granular reporting, allowing businesses to track costs more accurately and identify areas for optimisation.
• Cost centres and backcharging: For organisations with multiple departments or business units, implementing cost centres and backcharging mechanisms can be highly effective. By allocating cloud costs to specific cost centres, businesses can ensure that each department is accountable for its own cloud usage. This promotes financial responsibility and can lead to more disciplined spending. Backcharging allows for internal billing, where departments are charged for the cloud resources they consume, further driving cost-awareness and optimisation efforts.

Strategies for Cloud Cost Optimisation

Optimising cloud costs requires a strategic approach that balances cost savings with the need to maintain performance and reliability. Infostatus employs a range of optimisation strategies tailored to each client’s specific needs:

• Right-sizing resources: One common source of waste is over-provisioned resources. By right-sizing instances, databases, and storage, we ensure that our clients only pay for the capacity they need.
• Instance scheduling: Many cloud instances run 24/7, even though they are only needed during specific hours. Implementing instance scheduling allows businesses to automatically start and stop instances based on usage patterns. For example, development or testing environments can be scheduled to run only during business hours, significantly reducing costs. In one of our recent projects, implementing instance scheduling led to savings of 65% on the client's overall EC2 Compute monthly bill.
• Savings plans and reserved instances: Committing to long-term contracts for cloud services can yield significant savings. We guide our clients through the process of selecting the most appropriate Savings Plans or Reserved Instances, which can reduce costs by up to 70% in some cases.
• Removing unused resources: Unused resources such as unattached storage volumes or idle instances are a drain on your cloud budget. We help clients identify and remove these resources, resulting in immediate cost reductions. In one recent project, removing unused resources led to a $10,000 AUD annual saving.
• Application modernisation: Legacy applications are often not optimised for cloud environments, leading to inefficiencies and higher costs. By modernising these applications—such as moving from monolithic architectures to microservices, adopting serverless computing, or leveraging containerisation—organisations can significantly reduce their cloud spending. Industry research supports this approach: according to a 2023 report by Gartner, organisations that modernise their legacy applications can reduce their total cost of ownership (TCO) by up to 50% over five years. Additionally, Forrester reports that businesses that embrace cloud-native architectures experience 25% to 30% faster time to market. As an example of this, Infostatus recently migrated a legacy AX Dynamics system from a SQL Server-based architecture to a more cost-effective solution using Amazon S3 for storage, Athena for querying, and a web front-end for access. This transformation not only improved the system’s performance and scalability but also reduced running costs by 90%.
• Optimising architectures: Beyond right-sizing and resource removal, we also explore opportunities to optimise cloud architectures for efficiency. This includes leveraging newer, more cost-effective technologies as they are introduced, implementing or optimising scaling strategies, and optimising network architectures.

Realising the Benefits of Cloud Optimisation

The benefits of cloud cost optimisation are clear: reduced expenses, improved operational efficiency, and better alignment of IT resources with business goals. At Infostatus, our approach is not just about cutting costs—it’s about ensuring that your cloud environment is set up to support long-term business success.

One of our clients is running mainly serverless and containerised workloads but had annual spending nearing $157,000. By focusing on optimising their architecture and configuration of services, we were able to recommend actions that could save them approximately $30,000 annually. Another client with primarily EC2 workloads was spending $160,000 per year, and through our cost report, they were able to realise savings of $40,000 per year. These savings are not just theoretical; they are based on proven strategies that we have successfully implemented across multiple clients.

Why Partner with Infostatus?

AWS pricing is complex. We want to make it easier!

AWS is constantly evolving with new architecture patterns, services, and pricing models becoming available all the time that can help save costs. Keeping across these changes can be challenging, which is where our Cloud Cost Review service comes in. Your customised report will give you a point-in-time snapshot of your current AWS costs and where opportunities lie for increased efficiency, along with prescriptive guidance on how to achieve savings.

At Infostatus, we bring a wealth of experience in cloud cost management and optimisation, coupled with a deep understanding of the latest cloud technologies. Our tailored assessments and strategic recommendations help clients reduce their cloud costs significantly while maintaining—or even improving—performance and security.

If you’re looking to take control of your cloud costs and optimise your infrastructure for the future, Infostatus is here to help. Contact us today to learn how our cloud cost assessments can lead to significant savings and a more efficient, effective cloud environment.