What is cloud cost monitoring?
Cloud cost monitoring is a way to track and analyze expenses related to cloud services, such as data transfer, storage, and computing power. It includes monitoring resource allocation, usage, and billing data to optimize spend and ensure efficient utilization of your cloud resources.
Many specialized tools and techniques are available today for organizations to detect anomalies, identify cost-saving opportunities, and make informed decisions to align cloud usage with budgetary constraints. Having an effective cloud cost monitoring process enables you to manage expenses, maximize ROI, and maintain financial transparency in your cloud computing endeavors.
Why monitor cloud costs?
Cloud cost management is critical to every business due to the financial costs of operating in the cloud. In decentralized IT setups, teams often deploy cloud resources without giving much thought to the associated spend. They procure cloud resources for specific projects that are then abandoned—yet those resources continue to incur costs.
Accountability is another crucial factor for monitoring cloud costs. Forgotten instances pose risks such as security breaches, data duplication, and corruption. Tracking spend ensures visibility into created instances, their origins, and associated costs. This transparency aids in budgeting and tracing issues back to their sources, fostering accountability within your organization.
Benefits of cloud cost monitoring
Aside from the straightforward benefits of regularly monitoring cloud costs, there are many interconnected and hidden benefits as well.
Cost optimization
When you monitor what your business spends on the cloud, you can identify inefficiencies and optimize expenses. Poor IT governance in organizations often leads to buying duplicative services and paying for resources that are no longer needed. Cloud cost management helps identify and prevent such waste, ensuring more efficient resource allocation from the outset.
Resource efficiency
Monitoring enables you to assess your business’s usage patterns of cloud resources, which helps reduce waste and make more efficient use of these resources.
Forecasting and planning
Understanding past expenses for various cloud resources provides you with insights into the requirements for future business endeavors. Accurate forecasts today drive effective cloud cost management going forward.
Security
Monitoring cloud costs empowers you to identify security risks that may result in data breaches or other concerns, such as unsecured or underutilized resources. You can then mitigate these issues by taking the necessary actions.
Enhanced decision-making
Having accurate data on costs and usage empowers you to make better decisions when it comes to your cloud infrastructure. This includes choices such as scaling up or down, selecting a different service provider, or optimizing architecture to reduce expenses.
Continuous improvement
To maximize ROI from your cloud infrastructure, you need continuous insights from cloud cost monitoring.
How often should you review your cloud cost monitoring results?
It is imperative to monitor cloud costs regularly to ensure your business stays within its budget. However, determining how often you should examine what the results show about your cost trends depends on various factors including the size of your business, critical data, and cloud usage variation.
A recommended practice is to analyze your cloud cost data weekly. This will help you quickly identify any anomalies and take action as needed. Regular reviews ensures your business maintains financial discipline and avoids overspending on cloud services.
What factors impact cloud costs?
Several factors significantly impact cloud costs, and understanding these can greatly help you optimize the money spent on cloud investments and maximize ROI. The following are some top factors when it comes to your cloud spend.
Resource usage and scaling
One significant factor that deeply impacts cloud costs is resource usage. Most cloud service providers (CSPs) charge based on resource consumption, which includes computing power (CPU), data transfers, and storage utilized by each cloud instance. As usage of these increases, so does the cost.
Your organization must properly monitor the use of its cloud resources to avoid getting hit with unexpectedly high bills.
Instance types and configurations
CSPs offer numerous instance types based on CPU, memory, storage capacity, and other specifications, and each is priced accordingly.
Selecting the instance type most suitable for your requirements is imperative for cost optimization. For example, instances with higher specifications than needed can lead to unnecessary spending, while choosing under-powered instances can lead to compromised performance.
Storage and data management
It’s critical to assess your organization’s data storage needs carefully and choose the appropriate storage class to optimize costs. CSPs provide various options, including standard, infrequent access, and archival storage, each with different pricing tiers.
Furthermore, data transfer costs incurred while moving stored data—within the cloud or between regions—can quickly add up. Avoiding unnecessary data transfers and using cost-efficient transfer methods will help lower unnecessary spending.
Geographical regions and availability zones
Many cloud service providers offer data centers around the world, with some having lower costs than others. Choosing a particular geographical region and availability zone for deploying cloud resources can have a significant impact on your cloud budget.
For example, having your cloud infrastructure hosted in a distant location, such as in Asia for US-based customers, may be more cost-effective than using a nearby data center. This is often due to lower resource, utility, and infrastructure expenses in remote areas. However, you must also consider the performance trade-off that comes with these cost savings, such as increased latency or response time.
Reserved vs. on-demand instances
Having reserved instances with long-term commitments may be less expensive than on-demand instances, which are billed at higher rates.
Reserved instances are ideal for steady-state workloads with predictable usage patterns. However, upfront payment and inflexibility may not suit each organization and every use case. On-demand instances, on the other hand, provide flexibility at higher rates, making them suitable for unpredictable workloads.
When choosing between reserved and on-demand instances, consider your workload predictability and budget constraints for effective cloud cost management.
Top cloud cost monitoring tools
There are many native and specialized tools on the market today for monitoring cloud costs. The following are a few of the most popular tools.
ManageEngine CloudSpend
CloudSpend is a cloud cost management platform that helps businesses monitor and optimize their cloud expenses. Designed for AWS, Azure, and Google Cloud users, it provides detailed insights, budgeting tools, and real-time alerts. With easy-to-use dashboards, CloudSpend ensures better financial control and helps reduce unnecessary cloud spending effectively.
AWS Cost Explorer
Cost Explorer is an AWS-native solution for analyzing AWS usage and costs. It offers various intuitive visualization dashboards, cost breakdowns by service or resource, and forecasting capabilities. The comprehensive tool allows businesses to explore cost trends, uncover anomalies, and find ways to save.
Google Cloud Billing
Google Cloud Platform (GCP) offers its native cost management tool called Cloud Billing. It provides detailed insights into GCP usage and costs, along with customized billing reports, budget alerts, and cost-forecasting features. Businesses can analyze spending patterns, optimize resource allocation, and set budgetary limits to control GCP costs effectively.
Microsoft Cost Management + Billing
This Microsoft service offers cost analysis, budgeting, and optimization recommendations to help businesses achieve better control over their Azure spend. With its cost allocation features and integration with Azure Advisor, organizations can identify cost-saving opportunities and improve their resource utilization.
CloudZero
CloudZero is an intelligent cloud cost platform offering a unique approach to monitoring and management. It aggregates spend data from various cloud platforms and tools, delivering businesses a single source of truth. It also breaks down cloud costs to reveal where, when, and how money is being spent, offering valuable business context for proper cloud budgeting.
VMware Tanzu CloudHealth
CloudHealth by VMware is another cloud cost management platform designed to optimize costs across various service providers such as AWS, Azure, and GCP. It offers comprehensive cost visibility, governance, and automation capabilities. Businesses can track their spending, analyze cost drivers, and implement cost-saving policies to maximize ROI from their cloud investments.
Strategies for optimizing cloud costs
Employing best practices enables you to gain control over your cloud expenditure. The following are some key strategies to adopt.
Right-size resources
Make sure to analyze resource consumption and match instance sizes to your workload requirements. Downsizing over-provisioned instances or using autoscaling to adjust resources dynamically can save money without any performance loss.
Eliminate unnecessary instances
Paying for idle cloud instances is wasteful since costs accrue regardless of usage. Identify and deactivate unused instances to avoid unnecessary spend.
Implement automation
Utilize automation tools and scripts to optimize resource provisioning, scheduling, and scaling. Automating processes such as shutting down resources during non-business hours or autoscaling instances based on demand can help minimize waste.
Promote a culture of cost awareness
Cultivating cost awareness and accountability across your organization is key. Educate teams on the financial impact of their cloud usage and encourage responsible resource utilization to get the most out of your cloud investments.
Cloud cost monitoring plays an essential role in ensuring financial efficiency and optimizing cloud budgets. By monitoring and analyzing expenses related to cloud services, organizations can gain control over their cloud usage, identify cost-saving opportunities, and make informed decisions to keep cloud spending within budgetary constraints.
With the right tools and strategies in place, you can effectively manage cloud costs, maximize ROI, and maintain financial transparency in your cloud computing endeavors. If you’re looking to streamline your cloud cost management strategy, CloudSpend can be a great choice. Stay tuned for more updates and start exploring the latest features by visiting our features pages. To learn more, refer to our documentation and schedule a demo of CloudSpend.
