IT Cost Optimization Framework and Strategies

Today, most enterprise organizations invest in a hybrid multicloud model, which offers both flexibility and control over workload deployment. However, this modern IT infrastructure model comes with complexity. The more clouds that you use—each with their own management tools, data transmission rates and security protocols—the more difficult it can be to manage your environment. A lack of visibility into cloud usage patterns, for example, can result in excess expenditure on underused services.

In a recent study, enterprises are wasting billions of dollars on their public cloud infrastructure due to inadequate management, with more than 3-quarters of respondents estimating that between 21% and 50% of their cloud spending is wasted.³

Cloud cost management, also called cloud cost optimization or cloud cost governance, manages and reduces a business’s cloud spending. When implemented effectively, cloud cost management strategies enable FinOps, an evolving cloud financial management discipline and cultural practice that aims to maximize business value in hybrid and multicloud environments. FinOps can help an organization proactively identify and reduce unwanted spending, scale cloud resources and automate cost control policies.

More cloud optimization techniques include: 

• Rightsizing: Over-provisioning resources (for example, compute, network bandwidth, cloud storage capacity) is a common problem that organizations face in cloud environments. Rightsizing, the process of aligning the type and size of cloud computing instances with workloads, can improve cost efficiency by ensuring that an organization purchases the right amount of cloud instances. Cloud cost management platforms allow businesses to track resources and adjust their usage to achieve cost-cutting measures.

• Reserved instances (RIs): Organizations can buy reserve instances (RI) to save money and maintain flexibility. Reserved instances are purchased upfront, usually at a discount and are typically used during peak periods such as flash sales.

• Spot instances: Cloud customers can use spot instances to purchase unused computing capacity at a lower price from a cloud service delivery provider. Spot instances are best for short-term tasks such as batch jobs or background processing since providers can interrupt or terminate these instances with little notice when the capacity is needed elsewhere.