5 tips to optimize costs in the cloud

First COVID, then the war in Ukraine and now the looming recession: companies are preparing for uncertain markets and digging deep into their bag of IT tricks. Investments are increasing, especially in Cloud & SaaS. How do you keep costs under control?

When it comes to digital transformation, the path leads directly to a vast mountain range of private and public cloud, as well as a hybrid mix of SaaS, IaaS and PaaS. According to Flexera’s 2022 Tech Spend Pulse report, one-third (33%) of all IT spending is already earmarked for cloud computing.

Allocation of IT costs

Source: Flexera

So good news for digital transformation? no Because whether cloud investments really help companies master digitalization depends on two factors. On the one hand, the technological added value of each IT asset must be clear (Technology Value Optimization). On the other hand, it means keeping rising cloud costs under control (cloud cost optimization).

So much money is in the cloud

Organizations, on average, spend about 32% of their cloud spend on the cloud. In other words, you pay for apps and cases you don’t use. Such waste cannot be completely avoided. However, according to expert estimates, companies could reduce their cloud costs by 20-25% without impacting the business.

Unlike other IT spending, the cloud is often not tied to long-term contracts and can adapt more quickly to changing requirements. So by canceling unused monthly SaaS subscriptions and reducing heavy workloads in the cloud, you can quickly achieve success.

Tip 1: So check who is bound forever – cloud providers

Cloud providers sometimes exaggerate their offerings in order to attract customers on land or in the cloud for a period of 1 to 3 years. These include corporate agreements, reserved cases and savings schemes. However, companies should not just accept the first offer that comes along. Anyone who creates transparency on their IT assets, gets their IT budget in order, and enters negotiations with a clear idea of ​​requirements usually holds the best cards.

Tip 2: Quick and painless – make quick wins

Inventorying IT assets has another advantage: it reveals cloud cost reduction opportunities quickly and immediately. A comprehensive cloud cost optimization plan creates clarity and sets priorities. Potential quick wins result from:

  • Removal of zombie servers, unused SaaS applications and PaaS services
  • Remove unused storage capacity
  • Resource permissions
  • Migration to more cost-effective cloud instances
  • Termination of after-hours workload

Tip 3: BYOL caution – carry software licenses with you

The Bring Your Own License (BYOL) model allows licenses to be used locally or in the cloud. This usually saves money and reduces compliance and security risks. Companies can e.g. B. use your existing Microsoft Windows or SQL Server licenses in the Azure cloud. However, the opposite is also true: Some software licenses (eg Oracle) are subject to certain cloud restrictions and are often more expensive as a result. With a continuous inventory of all cloud and IT assets, IT asset management (ITAM) needs to monitor this BYOL and control the corresponding savings potential.

Tip 4: Strategically choose discounts

Once a holistic inventory analysis is completed, the right offer can be carefully selected. Enterprise agreements (eg Microsoft EA, AWS EDP program) reduce cloud costs, but discount levels are often limited and only possible every three years. Standard discount options (eg reserved cases or savings plans) can be purchased at any time and save up to 70% in the same period. However, it often does not make sense to select this option for all cloud resources. So before companies commit, it’s important to define the strategic and long-term goals of cloud resources. How will the use of the cloud change in the coming years? stand z. B. Relocations and thus change to other areas? Which digital initiatives are prioritized in the company?

Tip 5: Stay tuned – track and cut costs

Cloud cost optimization is an ongoing process that requires one thing above all: automation. Cloud management platforms like Flexera One help cloud governance teams. Not only do they identify opportunities for cost savings, but they also provide the tools to make those cost savings happen — automatically. Cloud infrastructure costs can be analyzed, forecasted and budgeted according to company-specific criteria (eg provider, account, region) and clearly aggregated in reports. Custom alerts report when budgets reach their limit. In this way, companies can reliably avoid unpleasant surprises and keep costs under control.

About the Author

Wolfgang Schuster has been with Flexera since 2021

Wolfgang Schuster

Wolfgang Schuster has been working at Flexera since 2021 and, in his role as Business Value Advisor, advises companies as well as large and medium-sized companies on issues related to license and software asset management (SAM) and cloud management. He can look back on more than 20 years of experience as a senior business consultant. In 2010, together with partners, he founded the European SAM Academy, the first training platform in Germany for standardized SAM training courses and, in cooperation with TÜV Rheinland, created a certification program for the major customer Volkswagen as a pioneer. Previously, he worked for Deloitte, among others, and co-founded COMPLION AG, a software asset management, data protection and IT security consultancy.

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