10 Tips to Reduce Costs with Cloud Expense Management  

10 Tips to Reduce Cloud Costs_Main blog page

No matter the size of your business, there’s always room to optimize and reduce cloud costs including those that come from infrastructure as a service (IaaS) and Software as a Service (SaaS). Here are 10 tips you can use to reduce both types of costs using cloud expense management (CEM) software and FinOps solutions.  

1. Eliminate Cloud Sprawl

Cloud sprawl refers to the uncontrolled growth of corporate cloud resources, including IaaS instances, SaaS services and cloud providers. Sprawl occurs when organizations use multiple cloud services when they may not be necessary. Another example is when different departments within an organization use the same cloud services independently – creating a duplication of tools in use. Sprawl isn’t the same as shadow IT, because the spend is authorized, but it does illustrate the same problem of insufficient communication and collaboration.  

Reducing cloud sprawl saves on costs, reduces waste and redundancy, and improves security. Because you’re regularly monitoring cloud purchases and usage with full visibility, you gain control over your resources. Follow up by implementing governance policies and further consolidating cloud services wherever possible. 

Check out this article on mitigating cloud sprawl.

2. Manage Shadow IT

Shadow IT is the use of software or devices by departments or individuals without the approval or involvement of corporate IT and security teams. This activity results in higher costs and increased security risks.  

Managing shadow IT requires regularly monitoring and cataloging SaaS applications, implementing strong governance policies, and training employees about the risks. Employees often resort to shadow IT when they can’t get access to the tools they need to do their jobs. CIOs and CFOs can deter that by communicating when cloud services and software applications are approved and licensed, and by using visibility software like Shadow IT Discovery tools to reveal all applications in use.

See the three ways FinOps solutions can strengthen your security posture

Get the four elements of effective SaaS management

3. Optimize Software Licensing Spend  

Another area to regularly monitor is software licenses. Licenses should only be used by the people who need them (and who still work in your organization). One way to check for license waste is by adopting license management tools, which help companies see who uses their app licenses, how, and how often. 

In fact, Tangoe offers the deepest license and user analytics for Microsoft 365, revealing which sub-products each license holder uses and which ones go to waste.   

As you better understand licensing needs, look to negotiate pricing and terms with SaaS vendors, especially when volume discounts or long-term contracts are available. All these steps can lower costs in the short term and in the long run. 

Check out the Ultimate Guide to SaaS cost management

4. Use Reserved and Spot Instances  

Using reserved instances (RI) or spot instances is a common cloud expense management tactic for IaaS cost savings. 

  • Reserved Instances are a type of cloud computing instance that can offer significant discounts over on-demand instances. They’re based on long-term commitments for a certain amount of computing capacity.  
  • Spot instances are unused computing resources that are available at greatly reduced rates. These instances can also be terminated with little notice if resources are needed elsewhere. You can consider spot instances as a cost-effective option if your workload is flexible.  

CEM solutions help you take advantage of these instances through cost and usage optimization processes such as resource monitoring and recommendations.

Check out this infographic on how to stop wasting resources in the cloud 

5. Manage Data Transfer Costs  

Data transfer fees are an important aspect of cloud computing that can generate significant IaaS costs if not managed properly. You need to understand your ongoing data transfer costs and where the major costs originate. When you can spot patterns in spending, you can optimize how data is transferred between cloud infrastructure resources.  

One optimization technique of many is reducing data transfer costs by compressing data before transfer. You can also look for cloud services that can offer cost-effective features, such as data transfer discounts or optimization features.   

6. Optimize Storage 

Storage costs soar when organizations overprovision infrastructure needs and allocate more storage than they need, especially if you’re not keeping an eye on storage capacity and allocation. To avoid this, regularly optimize your storage by releasing unused resources, such as orphaned volumes or snapshots. Additionally, adjust overprovisioned volumes to their optimal size. You can also reduce the overall amount of in-use storage by optimizing data utilization and training staff on cost-effective data management processes.   

7. Embrace Power Scheduling or Pausing Features  

Power scheduling is a cost-saving technique that involves scheduling IaaS resources, such as virtual machines and databases, to match your actual usage patterns. For example, you may have resources that are only needed during business hours. By pausing services or scheduling these resources to shut down in the off hours, you reduce the cost of running them.  

See more must-have capabilities for cloud expense management 

8. Implement Cost Allocation and Tracking  

Cost allocation and tracking involves assigning costs for cloud resources to specific departments, projects or business units — and tracking those costs over time. This process helps you understand where your cloud computing costs are going. You can do this by using cloud management tools and automation services. These offer cost allocation and tracking features, such as cost allocation tags. 

Don’t miss this cloud expense management guide for decision makers

9. Invest in Automation and AI  

Automation streamlines your cloud environment, reducing manual effort and the risk of human error. This can lead to significant cost savings, increased efficiency and higher productivity for cloud management. By automating repetitive tasks, you reduce the time and effort required to manage your cloud environment. Automation frees up valuable time and resources while improving visibility into cloud usage and costs. Automation can also help with cloud cost governance. Here are some examples of how AI enhances automation for cloud expense management.  

  • Advanced AI analytics are key in making sense of all the data SaaS applications and IaaS services generate. When the human brain is not fit for real-time evaluations at scale, AI-powered optimization engines can pinpoint problems in seconds and offer recommended solutions that only get smarter as they consistently learn the patterns of your company’s service needs and utilization habits. 
  • Considering that there are over 1 million ways to purchase a single server from Amazon Web Services alone, an AI-powered IaaS optimization engine can quickly evaluate your current infrastructure configuration against the most cost-effective ones, offering recommendations to cut costs. 
  • When implementing IaaS and SaaS cost-cutting recommendations can be time consuming, automation helps CIOs and IT teams quickly make changes to their service settings for more optimized environments. Plus, automation helps accelerate the speed of invoice capture, procurement processes, and other financial management tasks.  

    Get the FinOps guide to AI

10. Perform Continuous Analysis  

Your cloud infrastructure and SaaS purchasing processes should be regularly monitored and analyzed from a single platform. Understanding your usage across the entire cloud estate helps you identify opportunities for improvements in efficiency and fiscal responsibility. Continuous performance analysis also covers monitoring of resource utilization, which helps you reduce waste and ensure that you’re only paying for what you need. Regular monitoring also flags potential performance problems before they become larger issues. When you’re optimizing your cloud environment, you’ll improve productivity and reduce costs simultaneously. This is one of the key principles of a FinOps strategy.  

Tangoe One Cloud is the leading solution for cloud expense management, so when you’re ready to tackle all 10 steps here call on the company that covers your IaaS and SaaS cost optimization and takes your savings even further with expense management solutions for mobile devices and telecom services too.