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Cost optimization in the cloud

What is cloud cost optimization?

Cloud cost optimization—also known as cloud cost management—is the ongoing process of optimizing your cloud spend. The goal is to reduce your cloud spending while maintaining or improving the value of your cloud tools. 

The elements of cloud cost optimization include:

  • Understanding costs and benefits (TCO, ROI
  • Planning for cost optimization up-front (before you migrate or introduce new tools)
  • Managing costs on an ongoing basis

The keys to cost management are visibility and responsibility, which means having someone specifically responsible for regular audits with an eye to cost savings.

If you choose this strategy, your first step will be auditing the data you currently have. Next, you’ll prioritize which data you want to migrate, leaving behind data you no longer need. And then you’ll proceed to migrate with that smaller, higher-priority data set, keeping your migration lean.

Advantages of cloud cost optimization

30% of cloud spend is wasted and organizations over-budget for cloud by about 23%, according to Flexera’s 2020 State of the Cloud report. Which means if your company is like most, optimization could save you 30% on your current cloud spend—and help you create more accurate budgets for the future.

Cloud cost optimization best practices

So, how exactly can you reduce your cloud spend by as much as 30%? By paying attention to, prioritizing, and being strategic with cost optimization best practices. For example:

Clear roles and responsibilities

If no one’s driving the ship, it’s going to run aground. If no one’s paying attention to your cloud spend, it’s going to inflate—at an alarming rate. The most important thing you can do to keep costs well managed is to make it clear who’s responsible for cost optimization and what that role entails. 

Who’s responsible for keeping cloud costs optimized? How often will they audit your cloud spending? What specific tasks should be on their calendar? Who do they report to and how often should they be generating cloud spend reports?

Identifying this person or team asap and setting clear responsibilities and expectations is the best way to set your optimization process up for success.

Free trials or trial upgrades

Taking advantage of free trials or trial upgrades can typically save you two to four weeks of license costs. And in some cases, you can save much, much more. For example: Atlassian customers who plan on migrating to cloud can take advantage of a free cloud trial for up to 12 months.

Automatic scaling

Automatic scaling options are designed to make sure you maximize your computing power when you need it and minimize (and thus don’t pay for) it when you don’t. As our team explains in How to scale (faster and more affordably) in cloud

“If your computing power needs to increase on Black Friday, for instance, you want your server capacity to scale up to meet those needs. If your computing power needs drop between 2 a.m. and 4 a.m. local time, you want your servers to scale down to use less resources (and cost you less money) during those slower hours.” 

Automating the scaling process ensures that systems don’t get overwhelmed, slow down, or even crash if you have an unexpected spike in usage and it saves you money by reducing your computing power (and your spending) whenever things are slow.

Auto-parking

Don’t want to enable automatic scaling? Auto-parking—or scheduling resources to shut down during off-hours—is the next best thing. It’ll keep you from paying for computing power when your users aren’t online.

License audits

Another common pitfall that can cost companies a bundle is over-licensing (or paying for software licenses you don’t need). This may happen when employees leave the company, stop using the software, or accidentally sign-up multiple times. Regular audits and processes or automations that confirm when tools are in active use (and when they’re not) can help companies avoid these often-hidden and often-larger-than-you-think costs.

Tool audits

Do you need all the tools your team has access to? Can any be consolidated or downgraded while still meeting team needs? Is there shadow IT you should be upgrading or factoring into your cloud costs? Tool audits should help you answer these questions and more, looking for new ways to keep teams working efficiently while also optimizing cloud costs.

Storage audits

Do you need all the data you have? Should you archive or delete old data, freeing up space and potentially allowing you to downgrade your cloud plans (many of which have costs tied closely to your data storage needs)? Regular storage audits help you keep up with the cost of data storage, archiving to reduce costs where possible.

Forecasting

The person responsible for cloud cost optimization should be looking for ways to save now—but also in the long-term. Will your needs change next quarter? How about in six months, a year, or five years? Are there additional costs you should factor in or reductions you can take advantage of in the future? What does your true cloud cost spending look like year-over-year? How much does it grow by? And how can you avoid over- or under-budgeting?

Open communication with your teams

What tools are teams using today? Do they want to use different tools? Are there upgrades or changes that would make them more efficient, collaborative, creative, or satisfied with their work? 

The person responsible for cloud cost optimization may be primarily interested in looking for savings, but it’s worth noting that increased productivity, collaboration, and creativity may make it worth spending more when you could spend less. 

Keeping communication open with teams helps balance a strong focus on cost saving with a finger on the pulse of what works best for teams—and optimizes cost as it relates to value.

Tracking ROI

Total cost of ownership (TCO) and return on investment (ROI) shift over time. The goal of any good optimization program should be to always understand what those two numbers are and where it makes sense (or doesn’t make sense) to try and increase ROI and reduce TCO.

Don’t trade value for the sake of cost

Good cloud cost optimization isn’t about spending the absolute least you can spend. It’s about balancing spending and value, reducing waste, and optimizing what you get for your money

The best person to lead your optimization efforts is someone who can see the big picture, including the ways you can reduce cloud spend, yes, but also the ways you can improve work, increase value, and get the most out of your cloud tools.

Challenges of starting fresh

The first step to optimize your cloud spend is understanding your total cost of ownership and return on investment. To help you get started, we’ve developed a few tools and guides:

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