How to cut your company’s cloud costs, according to the experts

An abstract image of a magnifying glass over a digital cloud.
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With governments across the world wrestling to keep inflation under control and grumbles of global recession growing louder, many businesses are set to face a period of considerable economic pressure.

In times of high inflation, the appetite for spending cools off, the cost of borrowing rises and employees begin to demand raises to offset the increase in the cost of living, all of which has an effect on the bottom line.

To help businesses cut back on costs and improve efficiency, TechRadar Pro spoke to CTOs from a broad range of industries, who highlighted the best areas of the technology stack to target for savings. In this edition, we focus on keeping a lid on spiralling cloud costs.

Avoid over-provisioning and under-utilization

Stephen Manley, CTO at software company Druva, told us the best way to drive cost savings is to ensure resources do not go underutilized. A common mistake, he says, is to “lift-and-shift” workloads to the cloud, which introduces inefficiencies that may prove costly in the long run.

“Even with virtualization, servers, storage, and networks are over-provisioned and under-utilized,” said Manley. “Even worse, administrator time is wasted managing, patching, and troubleshooting legacy hardware and software. ‘Lift-and-shift’ to the cloud does not solve the problem. In fact, it often becomes worse because companies pay a premium for the underutilized resources.”

“The only way to streamline is to refactor for the cloud. If an application uses resources only when it is running, it will cost less than running it on-premises.”

“The best IT organizations streamline by purchasing SaaS solutions, so they don’t have to do the work. SaaS vendors have built cloud-native solutions to reduce their costs, which they can pass on as savings to their customers.”

Digital clouds against a blue background.

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Defeat the bloat

According to Carl Austin, CTO at consultancy BJSS, the rush to transition the cloud has resulted in a bloat problem that is adding unnecessary expenses to the bottom line. On the bright side, this means there is plenty of room for optimizations.

“Moving to the cloud has been viewed as a way that organizations can reduce their IT spend. However, the drive to migrate and deliver technology at pace has often taken precedence over ensuring efficiency in operational costs. This has led many enterprises into expensive, bloated public cloud bills, running to hundreds of thousands a month, limiting business benefit,” he explained.

“Implementing a FinOps culture, backed by data from comprehensive cloud observability will enable you to make data-driven cost decisions. This will provide an understanding of where money is being spent, where cost savings can be achieved, and how cloud spending decisions align to business strategy and return on investment."

"Depending on the starting point it can be possible to achieve cloud cost savings of as much as 40-60%, through refactoring and optimization. For forward-looking cloud spend decisions, FinOps ensures that cost is easy to factor in from the start, for engineers, architects, finance, and business alike.”

Think hybrid

Echoing the advice of both Manley and Austin, Pulsant CTO Simon Michie warned of the risks of spiralling public cloud costs and a “lift-and-shift” strategy. To combat these issues, he says a hybrid strategy is the way forward.

“One of the biggest areas of overspend for many organizations is the cloud. As cloud consumption grows, public cloud costs are spiralling due to lack of governance, and expertise to manage these costs, as well as exchange rate fluctuations,” he told us.

“An optimized cloud purchasing strategy ought to align to a cloud adoption and transformation framework. By doing this, the framework will deliver continuous improvements and the ability to use new agile technologies will reduce the total cost of ownership in a difficult macroeconomic climate.”

“Adopting a hybrid strategy, made up of both public and private clouds, will allow businesses to prioritize workloads, choose locations best suited to their criteria and uphold application efficiency.”