The FinOps Approach to Automate Cloud Cost Optimization Cycle

Businesses are shifting their IT infrastructure to the cloud for the certain benefits that this new era of computing has. While cost, compliance, and performance are some of the obvious reasons for the change, a large share of the business community has failed to realize these gains. 

In most cases, the abilities and advantages of cloud computing are turning the tables. For example, the flexibility to scale the infrastructure results in the over-provisioning of resources, which leads to wastage, anomalies, and bill spikes. 

Studies suggest that 1/3^rd of businesses overrun their cloud cost by up to 40%, which impacts their cloud ROI, drastically. 

To work around this issue, i.e. to reduce the cloud cost, it is important to optimize the cloud infrastructure today, and for tomorrow. This practice of visualizing resource anomalies and working around them is a continuous process, known as cloud cost optimization. 

What is Cloud Cost Optimization? 

Cloud cost optimization or Cloud financial management is the process of rightsizing computing resources to reduce the overall spend on cloud infrastructure. This involves identifying mismanaged resources, reserving capacity for discounts, eliminating idle resources, etc. The idea is to have a unified visibility for resource utilization and derive actionable insights to reduce the overall cloud cost. 

The ease in resource procurement supports the scalability requisites for the infrastructure. However, to avoid the misalignment of resources in a complex, scaled environment, it is critical to have a cloud cost optimization strategy in place. 

The market out there has numerous cloud cost optimization tools, promise to reduce the overall bill amount by a certain percentage. The way to optimize the cost is to optimize the infrastructure. If the IT infrastructure has well-utilized resources and is procured with the best strategies (reserved instances, savings plan, right storage, etc.), the cloud ROI will always be positive and growing. 

With this thought, we are sharing some of the best practices to cloud optimization that can be adopted to manage & control the cloud bills as well. We have divided these practices into computing, storage, network, and database level. 

Compute

You migrated the IT infrastructure to the cloud. Compared the cost of on-premise workloads with that of the cloud. You realize that cloud ain’t bringing much difference to the infrastructure cost. In fact, some of the cloud workloads cost higher than workloads on-premise. And you feel like a victim of the cloud hype. 

One of the common mistakes in on-prem vs cloud comparison scenarios is businesses end up comparing the server platforms. Cloud platforms use the latest-generation hardware and that’s actually responsible to bring down the cost of infrastructure. That is why it’s important that the infrastructure is provisioned thoughtfully. 

• Lean provisioning and rightsizing: Identify over-provisioned instances, release idle resources, and match instances with workload requirements. 

• Autoscale workloads: Let your workloads scale up or scale down in response to the traffic and demand.

• Opt for savings plan/reservations: For workloads that require running 24/7, it is beneficial to leverage reserved instances or go for compute savings plan.
  

Note: This kind of provisioning requires a commitment for a certain level of consumption to avail of discounts. There could be a discount of up to 70%, depending upon the duration and consumption of workloads. 

• Schedule Infrastructure Availability: Analyze usage patterns for services or workloads. Scale them down (turn them off) when the demand is low (usually during weekends or at night). 

Storage

Selecting the right storage solution depends upon a variety of factors- kind of access method (block, file, object), frequency of access (offline, online, archival), available /durability constraints, and access patterns (random, sequential). For cloud cost optimization, the following practices can be considered: 

• Reduce reserved storage: Visualize and reduce storage buffer, wherever possible. 
• Opt for tier-based storage: Tiered storage helps to select the storage based on business needs. For example, there can be data that won’t require performance-based storage, such as backups. 

FinOps Approach to Cloud Cost Optimization 

The traditional approach to cloud optimization has evolved. It’s real-time, data-driven, and collaborative. This paradigm shift in how the cloud environment, its performance, and the cost are handled is nowadays termed as FinOps. 

FinOps is a cultural practice that enables businesses to derive maximum value from the cloud with data-driven decision-making. To understand how FinOps is bringing a transformation in managing the cloud cost, check out this detailed article on FinOps vs. the Traditional approach to cloud optimization. 

READ MORE: FinOps Vs. The Traditional Approach: How has Cloud Cost Optimization Evolved Over Time?

At Daffodil, our approach to cost optimization is backed by FinOps practices, ensuring that businesses have measurable and visible savings on the cloud. Here is our 2-step approach to cloud cost optimization powered by FinOps. 

Step 1: Discover cost-saving opportunities in the cloud

The first step to cloud cost optimization is to detect the cost anomaly. To figure out what’s causing the cost spikes, it’s important to have a clear picture of resource utilization and spending patterns. This may involve analyzing factors such as idle or underutilized resources, how the resources are procured, etc. 

Step 2: Optimize and improve cloud infrastructure 

Basis the report generated in the previous step, our DevOps experts take necessary actions to optimize the cloud environment (compute, network, storage, or database). 

Step 3: Monitor and regulate cloud costs for future 

To ensure that the infrastructure is optimized for tomorrow, team Daffodil creates a dashboard for unified visibility of cloud resource utilization and spending pattern. This keeps businesses in a position to keep the infrastructure optimized and control the cloud cost for the future. We automate the cost optimization cycle for you. 

CCO