3 Key Mistakes to Avoid In Achieving Cloud Cost Optimization

In an era where every dollar counts, managing cloud costs efficiently can make all the difference. As businesses increasingly turn to cloud solutions, it is easy to overlook hidden costs or inefficiencies. By focusing on smarter financial operations, you can reduce cost leakage and ensure your organization maximizes cloud savings.  

We know that cloud cost optimization can be tricky, and small missteps can lead to big expenses. Here are three key mistakes to avoid keeping your cloud budget in check and stretch your savings. Taking control of your cloud finances is a crucial step toward sustainable growth. 

The Hidden Costs of Cloud Savings

It is easy to fall into the trap of purchasing reservations or saving plans for virtual machines upfront to gain volume discounts and right-size the production later. However, this strategy may backfire. Your engineering team will notice that costs haven’t dropped as expected, even with commitment-based discounts. While trying to identify the root cause, they apply a Start/Stop policy, but this often proves to be ineffective. When machines are turned-off you’re still being charged for reserved instances.  

How to Fix This? 

Start evaluating the operational needs across the company and develop an action plan that includes the migration or adoption of new features which use the remaining commitment-based discounts. Socialize the plan with your key stakeholders to get buy-in and understand if there are new projects that need to be implemented in the coming months.  

Resource Autoscaling Mismanagement

A common issue we encounter is the improper setup of resource scaling rules, either due to inefficient use of IaaC (Infrastructure as Code) or lack of implementation expertise. We’ve come across cases where environments failed to scale down properly, resulting in higher costs incurred. In practice, many systems successfully scale up when demand increases, but struggle to scale down when it decreases. This leaves excess capacity running, which drives up costs if not managed well. Autoscaling should be carefully configured to handle scaling scenarios in resource demand.   

How to Fix This? 

Understand the autoscaling rules, the scale down criteria, and in some cases, even adjust the “Cooldown Time” for a new change in the resource scale. When dealing with scenarios using IaaC tools, such as Terraform or Azure Resource Manager, it is necessary to identify and correct errors in the adopted code. These actions can improve resource efficiency and avoid unnecessary costs. 

Resource Oversizing

Another common mistake is over-allocation of resources, where more computing capacity is assigned than the environment needs. This is a frequent error in traditional IT resource management, where companies often allocate more computing power than required, anticipating future spike in demand. While it is intended to avoid upgrading later, this results in excessive costs and unused capacity that doesn’t align with the actual workload.  

The cloud’s “pay-as-you-go” model Is designed to match your actual needs. However, when resources are oversized, it leads to unnecessary expenses and undermines the benefit of spending according to your consumption needs.  

How to Fix This? 

To avoid oversizing effectively, it is critical to monitor and evaluate the actual usage of your computing resources using cloud cost management policies and automation. If a machine is over-provisioned in terms of memory, CPU, or IOPS, immediately scale it down to match the requirements. Rightsizing is a key first step in cost optimization, even more important than committing to longer-term discounts, ensuring that you’re only paying for what you truly need. 

What about AI-powered tools on cloud cost savings?

We understand that not every business is ready for AI, and some are still working on finding the right justification. Whether you’re just beginning your AI journey or already have experience, we’re here to help you find ways to improve your operations and reduce costs. If you’re ready to explore AI, we can support you in cleaning and organizing your data and run a proof of concept tailored to your needs. We believe in starting small, with a pilot project, to show the value of AI-powered insights before committing to larger implementations. 

The use of AI for FinOps brings several benefits for cost control, including anomaly detection and continuous cost optimization carried out through predictive analysis, monitoring, alerts, and savings recommendations. 

Cloud cost optimization requires a strategic approach to avoid hidden fees, mismanaged autoscaling, and oversized resources. By carefully monitoring your usage and aligning your operations with actual needs, you can maximize savings and drive sustainable growth.

Pedro Drumond, IT Support Technician, Certified FinOps Professional, Beyondsoft 

Why Are We a Good Fit for Your Cloud Cost Optimization Needs?

FinOps Expertise: Our deep understanding of FinOps principles allows us to provide tailored solutions that meet your unique requirements. 

Trusted Partner: We don’t believe in a one-size-fits-all approach. We listen to understand your company’s requirements, current tech stack, and employee readiness for change. These insights enable us to design a customized plan that aligns with your goals and helps you start your journey toward adopting the FinOps culture. 

Detailed Cost Analysis: The State of FinOps 2024 cites the key priority in cloud expenditure is reducing waste and managing commitments. It is important to take back control of your cloud savings and we will work with you to identify opportunities for cost savings.  

Ready to Start Your FinOps Journey? 

Beyondsoft’s engagement framework offers an iterative and flexible approach tailored to your organization’s specific needs.  Contact us today and let us explore the future together.