Maximize Cloud Savings: Advanced Cost Reduction Strategies

This is a (long) summary. More detail on each strategy with real customer stories in my full article.

Strategies for Organizations

Cloud migration can be a powerful way for organizations to reduce costs and improve efficiency. But it's not just about moving to the cloud - there are advanced strategies you can adopt to truly maximize cost savings.

In this article, I'll share common tactics like right-sizing instances and optimizing storage, as well as advanced strategies like modernizing applications and upskilling talent that have led to dramatic cost savings (97% in some cases) and unlocked new business opportunities for our most successful customers. Read on to learn more about these strategies and how to implement them in your organization.

Common Cost Reduction Strategies

Let’s start with the common tactics cloud migration teams can adopt to reduce costs:

1. Right-size instances: One of the biggest advantages of the cloud is the ability to scale resources up or down as needed. By right-sizing your instances and choosing the appropriate pricing model (such as on-demand or reserved instances), you can ensure that you're only paying for the resources you actually need.
2. Optimize storage: In the cloud, storage costs can add up quickly. By optimizing storage (for example, by compressing files or using more cost-effective storage tiers) and regularly reviewing and deleting unnecessary files, you can keep costs under control.
3. Automate the mundane: Scaling, backups, patching - most of these tasks and processes can be automated so cloud teams can reduce time spent on manual tasks. This will drive maintenance efficiencies and increase developer productivity.
4. Increase visibility on your cloud costs: FinOps tools can help you track and optimize your cloud spend, identify and eliminate idle or underutilized resources, and set custom budgets and alerts. A simple tactic for increasing visibility is to give read-only access of cloud billing dashboards to related IT and business teams, allowing them to see cost allocations and promoting transparency within the organization.

Common tactics such as right-sizing instances, optimizing storage, automating tasks, and increasing visibility on cloud costs are straightforward to execute and lead to savings. However, for large and sustained cost savings that support new business generation and revenue growth, companies should implement advanced strategies. These strategies require more strategic commitment, typically incur larger upfront costs and have greater success when part of a top-down mandate. They have the potential to unlock business agility and enable new revenue opportunities, making them difficult for leaders to ignore.

You will see savings, but such actions alone are probably not enough if you want to see large and sustained cost savings that supports new business generation and revenue growth.

Advanced Cost Reduction Strategies

These are several advanced strategies that companies should strive for to maximize cost savings when migrating to the cloud.

1. Modernize applications: Refactoring apps to take advantage of cloud-native services can reduce the need for expensive and complex infrastructure. Cloud-native apps can be more granularly monitored and controlled with auto-scaling and cost-optimization techniques. This can lead to dramatic cost savings for organizations - tens of millions of dollars per year. It's important to remember that app modernization is an ongoing process and not a one-time effort.
2. Implement a charge-back model for cloud applications: Effectively align IT costs with the business value of each application. This strategy eliminates the need for complex tagging and cost reporting and can effectively control costs.
3. Improve security: By identifying security vulnerabilities and creating a plan for meeting security standards and requirements, companies can minimize the direct and indirect costs associated with responding to security incidents and the breach’s impact.
4. Upskill and train people in cloud technologies: This can lower reliance on third party vendors for support and maintenance, faster adoption and implementation of cloud solutions, better understanding of security risks across the workforce, improve organization flexibility to match the best technology

Harness the Power of Continuous Improvement for Cost Savings and Innovation

Implementing advanced strategies for cloud migration can be challenging, but the benefits are significant. These strategies can lead to increased innovation, new features, and revenue streams. Cloud migration should be seen as a journey of continuous improvement at a faster pace and lower cost than on-premise environments. Organizations should adopt a variety of tactics and strategies, including basic tactics such as right-sizing instances, optimizing storage, and automating tasks, as well as advanced strategies such as modernizing applications, implementing charge-back models, improving security, and upskilling talent.

With the right approach, organizations can save money, become more agile, flexible, and better equipped to adapt to rapidly changing technologies.

I share more detail on each strategy with real customer stories in my full article.

Krystle Khoo is the Chief Strategy Officer at Tidal.?Follow on LinkedIn