The cloud offers unparalleled flexibility and scalability, but without diligent management, costs can quickly spiral out of control.
Despite the promise of cost efficiency, the reality can often include unexpected expenses and wasted resources. By focusing on the basics, organisations can optimise their cloud spend and avoid common pitfalls.
With that in mind, TechCentral hosted a recent webinar – sponsored by Autumn Leaf and Obsidian Systems – to discuss managing cloud spend effectively.
The webinar, “Tips from the trenches: doing the simple things well to manage cloud spend”, aimed to answer critical questions about cloud expenditure and management. It offered insights into several fundamental practices to avoid unexpected spending surprises, focusing on direct escalation policies and response plans, ensuring closure and avoiding cost traps – ultimately helping businesses optimise their cloud investments for better financial and operational outcomes.
Watch the webinar:
Key strategies for managing cloud spend
During the webinar, experts from Autumn Leaf delved into essential strategies that organisations must master to effectively manage and optimise their cloud expenditures:
- Make FinOps a core part of your cloud management approach: A critical strategy discussed in the webinar was the importance of making FinOps a core part of your cloud management approach. FinOps, or financial operations, is a practice that brings financial accountability to the variable spend model of cloud computing. By integrating FinOps, organisations can gain greater visibility and control over their cloud expenditures. The webinar highlighted the need for cross-functional collaboration between finance, technology and business teams to ensure cloud costs are managed efficiently. This includes establishing clear cost allocation practices, regular financial reviews and leveraging automated tools to monitor and optimise cloud usage continuously. Making FinOps a central practice not only helps in avoiding unexpected costs but also aligns cloud spending with business objectives, ensuring every rand spent on cloud services contributes to overall business value.
- Correct billing and cost management settings: Ensuring that your billing and cost management settings are configured correctly is the foundation of effective cloud spend management. This includes setting up consolidated billing for multiple accounts, enabling cost allocation tags and setting up detailed billing reports. Regular audits of these settings can help identify any misconfigurations or opportunities for savings.
- Early warning system with escalation and response plans: Implementing an early warning system is essential to catch potential overspend before it becomes a significant issue. Tools like AWS Budgets and Cost Explorer can be configured to send alerts when costs exceed predefined thresholds. Having a clear escalation and response plan ensures that these warnings are acted upon promptly to prevent budget overruns.
- Creating a FinOps cost review template: A FinOps cost review template provides a structured approach to reviewing and analysing cloud costs. This template should include key metrics such as total spend, cost per service and trends over time. Regular reviews using this template help identify areas where costs can be optimised.
- Setting budgets that mean something: Budgets should be realistic, aligned with business objectives and flexible enough to accommodate growth. Rather than setting arbitrary limits, use historical data and future projections to set meaningful budgets. Ensure that these budgets are integrated into your financial planning processes and monitored regularly.
- Allocate costs with transparency and accountability: A vital strategy for managing cloud spend effectively is to allocate costs with transparency and accountability. One recommended approach is to use AWS accounts to allocate costs, allowing expenses to be contained and tracked at a granular level. By combining these accounts with AWS Cost Categories, organisations can generate detailed reports that provide insights into spending patterns across different departments or projects. This method facilitates the use of chargebacks, ensuring that each team or business unit is accountable for their cloud expenses. For those requiring more customised billing reports, AWS Billing Conductor is an excellent option, offering tailored insights to meet specific financial management needs. Additionally, Cost Categories can be expanded using tags, enabling even finer granularity and precision in tracking and allocating costs.
- Pay-as-you-go efficiency: AWS does not offer a traditional pay-as-you-go plan. As a result, one effective approach to manage potential cost overruns is by limiting the use of regions, which helps in containing expenses within specific geographical boundaries. Another critical tool is setting quotas, though they come with challenges. There are thousands of quotas, each requiring individual settings, and there is no option for automation or bulk setting adjustments. Therefore, it is essential to set quotas strategically in areas where resources are actively used rather than indiscriminately. Particularly, focus on throttling serverless components to avoid common pitfalls such as infinite loops and potential security violations. Additionally, applying the principle of least privilege for permissions is vital. Engineers should only have access to create the resources they need, reducing the risk of accidental or unauthorised cost escalations.
- Ensuring closure/shutdown: Often, organisations accumulate cloud resources that are no longer in active use, leading to unnecessary expenses. The webinar highlighted best practices for identifying and terminating these resources to prevent wasteful spending. Implementing automated shutdown policies, regularly auditing cloud environments and setting up alerts for idle resources were some of the key recommendations. Ensuring closure or shutdown not only reduces costs but also improves overall cloud efficiency by keeping the environment clean and optimised.
Common pitfalls and how to avoid them
In the discussion, the panellists identified frequent mistakes companies make in cloud spending and provided actionable tips to help avoid these costly errors:
- Paying for unused resources: One of the most common issues is paying for resources that are not fully utilised. This can include idle instances, over-provisioned services or orphaned resources. Implementing automated tools to identify and terminate unused resources can help mitigate this issue. Regular audits and rightsizing exercises are also crucial.
- Complex pricing models leading to unexpected charges: AWS’s complex pricing models can result in unexpected charges if not fully understood. Investing time in understanding the pricing models and leveraging tools like the AWS Pricing Calculator can help avoid surprises. Regular training and updates for your team on pricing changes are also beneficial.
- Ensuring long-term cost effectiveness: Long-term cost effectiveness requires routine practices and adherence to FinOps principles. Use cost allocation tags to track and manage spend by project, department or team. Implement automated cost monitoring tools to continuously track usage and identify savings opportunities. Regularly review and adjust your cloud strategy to align with evolving business needs.
Closing thoughts
By focusing on these foundational strategies and avoiding common pitfalls, organisations can effectively manage their cloud spend and achieve significant cost savings. The key is to stay proactive, regularly review and adjust your approach, and leverage available tools and best practices to maintain control over your cloud expenses.
TechCentral, Autumn Leaf and Obsidian Systems thank all those who attended the webinar discussion.
- This promoted content was paid for by the party concerned