As is to be expected, I come right to the point: like objects in a mirror, Cloud astronomical Costs are closer than they appear!
Overspending on cloud services, as far as I've witnessed, is a reality of enterprises these days, no matter how much people deny it. You may have spotted it as a Software or Cloud Engineer or as a Solution Architect, but few people in those jobs are willing or have the authority to make that decision, and in the best-case scenario, it has been brought to the attention of upper technical management. The question is, who will oversee managing rising cloud prices and strategizing accordingly?
Based on the team topology, I would say that in a smaller enterprise, the CIO or CTO, and in larger enterprises, the CCOE, or in the worst-case scenario, one of the Enterprise Architecture functions, should anticipate demand, and use pricing options optimally to maximize the benefit of public cloud services.
CSPs (Cloud Service Providers) entered the fray by bringing the "promising" Pay-As-You-Go model or, more accurately, concept. Where they were promoting the "no commitment" tagline. Until a certain point, all models fulfilled the promise, but SaaS providers fallen short to that motto. In other words, there is some type of commitment behind SaaS. (Not to generalize, but many services are unavailable without a commitment.)
Optimize On a Continuous Basis
The good news is that, in theory, Cloud Providers offer scalable services that eliminate the need for over-provisioning of resources, particularly in IaaS or PaaS models. This is because, while SaaS services are typically not balanced in terms of usage requirements, providers also upsell the so-called "enterprise tier" solutions. It means that the more the discount on enterprise-tier, the greater the underutilization an enterprise will experience.
According to the Gartner SaaS Migration Survey (2019), 29% of midsize enterprises responded that between 25 and 49 percent of their top three SaaS vendors subscriptions are now unused!
Above mentioned statement implies that a level of financial clarity is required to maximize Cost Benefit. This allows one in charge to constantly analyze the capacity consumption of enterprise resources and pay only for what enterprise needs by rightsizing cloud services based on real usage.
Get the Best Price
So, we've addressed the major issue here, which is largely about SaaS services, and in public idea it's been established that IaaS and PaaS services are expected to be available on demand with no commitment. Of course, we are not disputing that CSPs typically give a discount in exchange for a commitment, which may boost the Cost Benefit Margin in some circumstances!
As a result, as the person in charge of Cloud Cost Optimization in your enterprise, you must be able to estimate or, more correctly, calculate the utilization of CIPS (Cloud Infrastructure and Platform Services) in order to receive the best deal from your provider (s).
Trends in Cloud Computing Cost Reduction
There are a few well-known strategies to consider for cloud cost reduction that I'd like to highlight here as well.
Probably start with monitoring usage and determining the pattern of utilization and its relationship to business operations. This will allow you to forecast future utilization and associated expenditures, while we're not talking about dollars and cents here.
Determine the right capacity and cost over the long run based on predicted consumption so that you may negotiate with CSPs to commit and take advantage of discounts.
A combination of native and third-party cost management solutions will also help you save money.
Using cost-cutting techniques (autoscaling, auto shutdown etc.). Those strategies are beyond the scope of this post, but they are extremely beneficial to dive into too.
Concerning SaaS Costs
However, for SaaS, we need to put in more effort to reduce costs because these days (as far as I know), SaaS solutions typically come with license/user numbers and are not genuinely Pay-As-You-Go, which makes it difficult to downsize after a while because it is "often" attached to a fixed term contract.
One of the key reasons why most SaaS providers are unwilling to give consumption-based tiers now, in my opinion, is the complexity of its measurement.
Contract flexibility can be used to establish a generic strategy to cost reduction in the SaaS model. So, in your SaaS contracts, negotiate more flexible pricing tiers or reducing number of users, licenses, term, and other variables.
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