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Cloud Cost Optimisation: Companies Often Overpay

Changing the IT infrastructure to the cloud is often associated with cost savings. However, a current study by GartnerExternal Link shows the frightening truth: in many cases, the cloud costs of companies are up to 70 percent higher than what they actually need to be. One reason to pay more attention to the cost analysis and savings potential in the cloud.

High cloud costs - here are the causes

Scalability and cost transparency, such as the "pay-per-use" principle common to cloud providers, are two of the main arguments in favour of the cloud. Indeed, the cost savings for small and medium-sized companies are often the main arguments made for the migration of their IT environment to the public cloud.

However, this thesis is only true if you pay attention to cost optimisation before, during and above all after the migration. The cost-optimised use of IT resources in the cloud is only possible if you employ someone who keeps an eye on various factors such as the number of users, budgets, storage space and instances used. In other words: without someone in charge who knows what to look for in cost-optimised cloud usage and how to proceed in cases of budget overruns, it can become expensive.

Building this resource within your own ranks takes time and money. For this reason, it often makes sense to work with a public cloud service provider. They will have the necessary specialist knowledge, the experts who can identify where the cost factor lies with just a few clicks and the ability to optimise it.

Reasons for high cloud costs

The savings potential of the cloud is often not made the most of, as the survey by Gartner shows. In general, this can be explained by a lack of cloud management. But even a look at the details shows that there is potential for savings in many places. However, the problem usually begins with the fact that many companies do not have the knowledge to read, manage or even optimise their cloud infrastructures correctly.

In addition to knowledge about cloud infrastructure, there is also a lack of knowledge about the cloud providers or so-called hyperscalers such as Amazon Web Services (AWS), Microsoft Azure or Google Cloud, whose resources are rented and used. Amazon Web Services, for example, offers up to 200 different services that can be used for or with your own cloud environment. Each of these services has its own billing model, which in some cases is multi-layered.

Cost optimisation for the cloud: reach for the "low-hanging fruits"

Many small optimisations can work wonders in relation to your cloud environment. With these tips you can check your cloud environment for cost traps and use optimisation potential:

1. Use Saving Plans and Reserved Instances

Customers of the cloud provider Amazon Web Services can use Saving Plans and Reserved Instances to save costs quickly. These are discounts that you can use if you commit to a certain term (e.g. one year) or special instance types.

2. Conduct AWS Well-Architected Review

The Well Architected Review is a model that puts your existing cloud infrastructure to the test in addition to security, performance and performance, especially in terms of cost optimisation. Experts evaluate your infrastructure, point out potential for optimisation and provide you with guidelines on how to manage your individual environment more efficiently.

3. Take a close look at your cloud account

Experience has shown us that cloud environments in small and medium-sized companies grow over the years, but not always in a coordinated manner. There are many sources of unnecessary or even duplicated costs. The introduction of "tags" is recommended to clarify which cloud costs are caused by which measures. This allows you to see exactly which services in the cloud cause which costs - to the minute and to the cent.

4. Before the migration: Perform a TCO analysis

Are you about to migrate your partial or complete system? If so, conduct a total cost of ownership (TCO) analysis. This clearly shows you what future costs will be incurred in the cloud and how they compare to your current IT costs. Up to seven different methods are available for migrating to the cloud (such as Lift & Shift, Replatform or Refactor). The TCO analysis will help you find out which method will get you to your destination safely and cost-effectively.

Our recommendations

Cost-optimisation in the cloud is complex and time-consuming, because every service you use has to be considered, re-evaluated and optimised if there is potential. It is therefore advisable to keep an eye on cost-optimisation as early as the architecture phase of your cloud infrastructure.

Those who plan and execute cost-efficiently from the start will not experience any nasty surprises afterwards when the invoice from the cloud provider arrives. This requires in-depth knowledge of the cloud providers themselves, as well as the efficient implementation of the services.

Our experts have the benefit of many years’ experience of projects in the public cloud, cost optimisation and setting up cost-efficient architecture.

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