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Cloud optimisation: cut your 2023 cloud spending by two-thirds

Tytus Kurek

on 16 January 2023

This article was last updated 1 year ago.

Cloud optimisation enables organisations to significantly lower their cloud spending while ensuring the desired performance and necessary compliance. It’s a process that every business should adopt when choosing cloud infrastructure as a foundation for their applications. It’s been proven that applying cloud optimisation best practices leads to a total cost of ownership (TCO) reduction of two-thirds under certain circumstances. 

But let’s step back for a second. How exactly does cloud optimisation help you avoid high costs? What exactly does it involve? And finally, why should you care about your cloud spending at all? These are all critical questions. Questions that deserve good answers. Let’s answer them as best as we can.

Cloud costs keep growing every year

One of the biggest paradoxes of cloud computing is that while leading public cloud providers have constantly been reducing their prices every year, most organisations have seen their cloud bills rise continually since their first cloud instance was launched. For example, Amazon Web Services (AWS) has reduced prices a total of 107 times since it was established in 2006. Meanwhile, in the Cloud Pricing Survey run by Canonical last year, more than 80% of the respondents said that their organisation had seen an increase in cloud infrastructure spending over the last two years.

Source: Canonical’s Cloud Pricing Report 2022

There are many reasons for this phenomenon. First of all, the spectacular success of cloud computing encouraged organisations to invest more in it. As a result, initial proof of concept (PoC) environments quickly became surrounded by developer virtual machines (VMs) and production workloads. Furthermore, as organisations keep growing, their resource demand also keeps growing. They run more applications, generate more data, etc. And finally, over time, many cloud resources usually become underutilised or even completely wasted. Precisely in the same way as any other types of resources, such as computer monitors or even office space.

By providing immediate access to highly scalable compute and storage resources, public clouds are a compelling option for organisations of any size. However, blindly consuming those resources without proper cost monitoring is unsustainable. It is not uncommon to see businesses embracing public clouds and sinking in costs a few years later. This is why adopting cloud optimisation practices is so important.   

What is cloud optimisation?

In short, cloud optimisation is a process of assigning the right resources to cloud workloads, taking compliance, performance and cost conditions into account. This starts with very fundamental decisions, such as choosing the right region. For example, an instance running on the East Coast might be up to 20% cheaper than the same instance running in California. Moreover, leading public cloud providers offer dozens of optimisation options, such as reserved and spot instances, which allow for significant cost savings.

But optimising public cloud workloads is just the first step in the cloud optimisation process. Organisations should monitor their spending constantly and look beyond their existing cloud provider. For example, it’s been proven that adopting hybrid multi-cloud architecture leads to cost optimisation when running workloads in the long term and on a large scale. Thus, they should watch their budget and be ready to migrate their workloads to a cloud platform that is the most cost-effective at a given time.

It’s also important to mention that cloud optimisation is not a one-time project. Instead, it should rather be adopted as an ongoing process. Businesses should run recurring audits, inspect their cloud workloads, tear down inactive services and shut down corresponding VMs. They should also review their cost optimisation strategies and take reactive actions if needed. Only when it becomes a habit can cloud optimisation guarantee long-term cost savings.

Cut your 2023 cloud spending by two-thirds

Adopting the cloud optimisation process has a significant impact on organisations’ budgets. This is because cloud spending is relatively high these days. For example, Computer Economics / Avasant Research estimates that average spendings on cloud infrastructure account for 5.7% of an organisation’s capital budget. At the same time, Gartner estimates that they account for 41% of the IT budget. Therefore, any potential savings resulting from following cloud optimisation best practices are meaningful from the budget point of view.

The exact amount always depends on the use case, the environment being used, workloads and their scale. Canonical customers noticed cost savings of up to two-thirds by following our official recommendations. As a result, cloud optimisation is something that no organisation should hesitate to consider in their 2023 plans. Especially when still wondering how to meet the new year’s budget.

Canonical’s solution was a third of the price of the other proposals we’d received. The solution is also proving to be highly cost-effective, both from CAPEX and OPEX perspectives.

Georgi Georgiev, CIO at SBI BITS.

Learn more about cloud optimisation

Now that you have a basic understanding of cloud optimisation concepts, you are probably wondering where to find more information about it. In this case, we have prepared several interesting follow-up materials for you:

  • Watch our webinar to learn how to effectively use the native features of public clouds to pay less for the same amount of resources and how to optimise costs in hybrid multi-cloud environments.
  • Get our cloud optimisation playbook to optimise your cloud infrastructure for cost, compliance and performance.
  • Check Canonical’s Cloud Pricing Report to get instant access to cloud list prices and service fees from leading public and private cloud providers, sample cost scenarios and exclusive commentary from industry experts.
  • Use our TCO calculator to estimate potential cost savings from migrating your workloads to a cost-effective private cloud platform.

REMEMBER: Cloud optimisation is an arduous process. Sometimes it might even require migrating some of your workloads to a different cloud platform. All of this trouble pays off in the long term, however. As a result, cloud optimisation is one of the best investments your organisation can make in the challenging market conditions of 2023. 

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