Top 10 cloud cost management mistakes to avoid in 2024

This is the year 2024, when businesses are gearing up to achieve new efficiency standards with scalable and elastic cloud services, CFOs and the Finance departments are concerned about cloud cost management. They are relying on their cloud service providers and in-house cloud experts to optimize the usage of cloud resources and get the most cost-effective cloud service stacks.

In a report by Markets & Markets, the global cloud computing market is set to skyrocket from $626.4 billion in 2023 to a staggering $1.27 trillion by 2028, surging at a CAGR of 15.1%. Furthermore, the global public cloud spending is expected to total $679 Billion in 2024 as per a recent report from Gartner.

This is progressive but alongside, a new Everest Group survey paints a worrisome picture. A whopping 82% of organizations grapple with cloud bills inflated by over 10% of waste, with 68% and 38% suffering losses exceeding 20% and 30%, respectively.

Let’s understand the common mistakes businesses fall prey to, hence, spiking their cloud budget.

CloudKeeper- Cloud cost optimization

1. Underestimating the Impact of Unused Resources

Just like unused gym memberships, idle cloud resources like virtual machines and storage rack up charges without delivering value. Before you know it, hidden waste would devour up to 35% of your cloud services budget.

Identify and reclaim these resources regularly through automated monitoring and scaling tools.

2. Failure to Implement Effective Resource Tagging

Think of tagging as cloud labeling. Without proper tagging, identifying resource ownership and tracking costs becomes a chaotic mess.

Standardize tagging across teams and automate it for future deployments to maintain cloud cost management transparency.

3. Ignoring Reserved Instance Planning

Reserved Instances (RIs) offer significant discounts for predictable workloads. Analyze your usage patterns and invest in RIs strategically to lock in cloud cost savings for long-term needs.

If required, understand and choose an automated RI management solution that will aid you in planning and maximizing cloud cost management savings.

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4. Lack of Collaboration Between DevOps and Finance Teams

Siloed operations lead to fragmented decision-making. Foster collaboration between DevOps, responsible for deploying resources, and Finance, who hold the purse strings. Jointly set budgets, track spending and share responsibility for cloud cost optimization.

5. Failure to Embrace Cloud Cost Visibility Tools

Trying to navigate cloud costs with raw data is like sailing a ship blindfolded. Utilize cloud cost management tools to gain insights into spending patterns, identify wasteful anomalies, and make informed optimization decisions.

6. Neglecting Automating Cloud Operations

Manually managing scaling, patching, and provisioning is inefficient and prone to human error. Automate routine tasks to optimize resource utilization and avoid unnecessary manual interventions.

7. Forgetting the Power of Cloud FinOps

FinOps is not just a trendy term; it’s a framework for managing cloud costs like a true business expense. Implement FinOps principles and practices to create accountability, ensure responsible spending, and maximize return on your cloud investment.

While challenges exist, Cloud FinOps aims to rein in cloud spending by efficient data tracking, and resource attribution and ultimately fuels organizational profitability and cloud goal achievement.

8. Overlooking Pricing Model Optimization

Understanding the different cloud pricing models and using them strategically can make a significant difference. Explore pay-as-you-go, spot instances, and serverless options to match your specific needs and avoid overpaying for fixed capacity.

Here, you’re already provided with a quick peek of cloud pricing models from leading cloud providers, including Amazon Web Services (AWS), Google Cloud Platform (GCP), and Microsoft Azure.

9. Avoiding the Cloud Waste Conversation

Ignoring the problem won’t make it disappear. Openly discuss cloud waste within your organization. Frame cloud waste not as a blame game, but as a common challenge with room for improvement.

Empower teams to identify and address inefficiencies, and celebrate past cost-saving initiatives, no matter how small, to create momentum and inspire ownership.

10. Falling for the “Set-and-Forget” Mindset

The cloud is dynamic, and so should your cost management strategy. Continuously monitor your spend, revisit past optimizations, and adapt your approach as technology and your needs evolve.

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By proactively addressing these common pitfalls, you can transform your cloud journey from a financial burden to a cost-effective springboard for success. Remember, the cloud is a powerful tool – make sure you’re leveraging it for maximum efficiency and avoid getting caught in the rain of avoidable expenses.

Integrating Real-world Insight: A Cloud Cost Management Case Study

cloud management insight

In the realm of cloud cost management, real-world applications and success stories underscore the significance of avoiding common pitfalls. Let’s delve into a case study that exemplifies how strategic cost management can lead to substantial cloud cost savings and operational efficiencies. For the sake of data privacy, we are keeping the unoriginal name, but with real-time events:

Case Study: MyEcom Corporation

Background:

MyEcom Corporation, a medium-sized enterprise that deals in the e-commerce business for unique household decorative items, embarked on a comprehensive cloud migration strategy in 2023. The goal was to transform their small in-store operations for items into an online business catering to selected regions. They chose to host their website and other workloads on Amazon Web Services (AWS).  With an increasing reliance on cloud services, the Finance and DevOps teams collaborated to optimize cloud expenditures and enhance overall cost efficiency.

Challenges:

At the outset of establishing their cloud infrastructure, they encountered challenges in comprehending the optimized requirements of cloud resources. They had acquired resources that went unused due to a lack of effective tagging, and consequently, underutilized instances were silently inflating their cloud bills. Recognizing the imperative for proactive cloud cost management, they decided to implement strategic measures.

Solutions Implemented:

For a small e-commerce business, like MyEcom, seeking efficient resource management and scaling on AWS, a tailored combination of services proves invaluable. They leveraged Amazon CloudWatch to ensure comprehensive monitoring of resources, collecting vital metrics for insights into performance. AWS Auto Scaling, integrated with various services like EC2 instances and ECS tasks, facilitated dynamic adjustments to capacity based on demand or predefined schedules.

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Also, the use of AWS Elastic Beanstalk provided them with a managed platform for deploying applications with built-in auto-scaling capabilities, simplifying the deployment process. Additionally, services like AWS Lambda and Amazon RDS Auto Scaling offered them event-driven and database-specific scaling, respectively, ensuring optimized resource utilization.

With these AWS solutions, they could seamlessly adapt to fluctuating workloads, enhanced overall performance, and maintained cost efficiency in the competitive online marketplace.

Results:

MyEcom Corporation experienced significant improvements across various aspects of its operations. Following the implementation of strategic measures, they observed a notable reduction in cloud expenditures within the initial six months, achieving a remarkable 20% decrease in their budget through the reclamation of unused resources. This cost reduction was complemented by enhanced collaboration between the Finance and DevOps teams, fostering more informed decision-making and optimized resource allocation.

Furthermore, the utilization of cloud cost management tools offered greater visibility into spending patterns and identified wasteful anomalies, enabling MyCom Corporation to make informed optimization decisions based on comprehensive insights. Overall, these positive outcomes reflect the success of their proactive approach to cloud cost management, leading to both financial savings and operational efficiencies.

Navigating the Cloud Cost Management Landscape in 2024

In this post, we have meticulously delineated the top 10 cloud cost management mistakes to avoid in 2024. From underestimating the impact of unused resources to neglecting the power of FinOps, each pitfall is dissected to guide businesses toward a more efficient, cost-effective cloud journey.

As organizations face the reality of inflated cloud bills, the roadmap outlined here serves as a strategic guide to transforming financial burdens into stepping stones for cloud success. In this era of dynamic cloud evolution, proactive adaptation to these insights is the key to harnessing the full potential of cloud resources while avoiding the downpour of unnecessary expenses.

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Obasi Miracle
Obasi Miracle is one of the brains behind 3rd Planet Techies. A webdesign afficionado and IT Support brain-box, he flourishes and revel in helping many-a-techies in their aspiration to become the best they can.

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