How to Achieve Cloud Cost Optimization (CCO) in 2024

Cloud spending is exploding. But costs often get out of control.

The solution? Cloud cost optimization.

CCO allows you to reduce your overall cloud expenses without hurting performance. This comprehensive guide will show you exactly how to implement CCO in 2024.

You‘ll learn:

  • What CCO is and why it matters
  • Steps for optimizing your cloud costs
  • Top tools to enable CCO
  • Common mistakes to avoid
  • Real-world examples

Let‘s dive in.

What is Cloud Cost Optimization & Why It Matters

Cloud cost optimization refers to reducing your total cloud costs while maintaining performance. It involves:

  • Finding misallocated cloud resources
  • Eliminating waste and overspending
  • Right-sizing cloud usage to meet demand
  • Taking advantage of discounts like reserved instances

CCO is crucial today because:

  • 92% of enterprises use the cloud. It‘s ubiquitous. [1]
  • Cloud budgets are massive. Almost one-third of IT budgets now go to the cloud. [2]
  • But…
  • Tons of waste exists. Around 30% of cloud spending is wasted on average. [3]
  • Costs are growing fast. Organizations expect cloud spending to grow 39% this year. [4]
  • It‘s a top priority. 61% of companies say CCO is one of their top initiatives. [5]

With runaway growth and extensive waste, getting cloud costs under control is critical.

CCO lets you rein in expenses and get the most from your cloud investment.

5 Steps to Optimize Your Cloud Costs

Follow these best practices to optimize cloud costs:

1. Rightsize Computing Resources

Identify idle cloud computing resources and consolidate what you can. Analyze usage to rightsize what you provision.

Buying the wrong instance types or overprovisioning wastes money fast.

2. Assess Reserved & Spot Instance Use

Detect reserved instances you don‘t need and optimize their use.

Leverage discounted spot instances for fault-tolerant workloads. They can cost 90% less than on-demand instances. [6]

3. Improve Frameworks & Governance

Align teams on cloud cost governance through shared frameworks. Avoid moving data between cloud and on-prem needlessly.

4. Optimize Storage & Subscriptions

Cut unneeded storage and subscriptions. Scale to current needs, not "worst case" scenarios.

Overbuying is easy. Storage costs add up fast.

5. Monitor Resource Usage & Decommission

Assign responsibility for monitoring and decommissioning cloud resources after projects end.

Don‘t pay for unused servers because nobody monitored usage.

Following these five steps will optimize your cloud resource utilization and slash costs.

Top 5 Cloud Cost Optimization Tools

Specialized CCO tools provide analytics and automation to optimize cloud spending. Here are top options:

  • AWS Cost Explorer – Native AWS tool with cost visibility, forecasts, and RI recommendations. Limited to AWS.
  • CloudHealth – Multicloud platform for cost management, governance, and migration. Now part of VMware.
  • Cloudability – Robust financial management solution for analyzing and optimizing spending across cloud providers. Owned by Apptio.
  • CloudSpectator – Multicloud SaaS for monitoring real-time consumption and costs across AWS, Azure, and GCP. Agentless.
  • CloudCheckr – Finance-focused SaaS for visibility, analytics, policy controls, and cost management across public and hybrid cloud environments.

Evaluate your environment and needs to select the right CCO tool(s).

Choosing the Best CCO Solution for You

Consider these factors when selecting a cost optimization solution:

  • Your cloud environment – Multi-cloud or single provider? Hybrid or public-only?
  • Size and complexity of your cloud usage
  • Functionality needed – Analytics? Budgeting? Optimization?
  • Ease of implementation and use
  • Degree of automation supported

For instance, a small firm using only GCP may find the native GCP Billing sufficient for basic cost visibility.

But large enterprises often need robust tools like Cloudability or CloudHealth to provide detailed analytics and automation across cloud providers.

Choose wisely to get the right level of optimization for your needs.

3 Common CCO Mistakes to Avoid

While critical, CCO has common pitfalls. Avoid these mistakes:

1. Lack of departmental alignment – Finance wants to cut costs. Engineering aims for high performance. Misalignments lead to suboptimal decisions.

2. Not maintaining CCO – It‘s an ongoing process as cloud apps change. Don‘t "set and forget" your CCO strategy.

3. No adoption – Some reject CCO out of fear of disruption or lack of resources. But it‘s crucial as cloud usage grows.

Getting teams aligned, keeping priorities current, and driving adoption are key to CCO success.

Real-World Examples of CCO Wins

Here are two CCO success stories:

  • Leaf Group – A consumer internet firm cut their Amazon S3 storage costs by 25% using CloudCheckr to optimize storage types. [7]
  • Atlassian – The software firm achieved over 90% utilization in their reserved instances by optimizing via Apptio‘s Cloudability. [8]

Proper cloud cost optimization unlocks big savings!

Key Takeaways

Here‘s what you learned about optimizing cloud costs:

  • CCO reduces your overall cloud spending without impacting performance by optimizing resources.
  • Following 5 best practices (rightsizing, managing instances, governing, optimizing storage, monitoring usage) maximizes CCO.
  • Leading CCO tools like Cloudability, CloudHealth & CloudCheckr provide analytics and automation to optimize cloud usage and costs.
  • Avoid pitfalls like lack of alignment, failing to maintain CCO, and no adoption.
  • Organizations like Leaf Group and Atlassian have used CCO to substantially cut cloud expenses.

With proper CCO, you can boost your cloud ROI substantially. Use these tips and best practices to tame costs!

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