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Cloud Cost Optimization in 2021

Optimization of cloud costs lowers spending by recognizing mismanaged capital, reserving higher discount space, and proper sizing.

Cloud Cost Optimization is the method of reducing the total cloud spending by finding mismanaged capital and scale-up of Right Sizing computing services. CCO only charge for the services you use, the cloud gives companies infinite scalability and lower IT costs.

  1. As per Gartner report cloud cost optimization is the first factor that will impact cloud adoption in 2020. Also Gartner predicts "75% of midsize and large organizations will have adopted a multi-cloud and/or hybrid IT strategy in 2021."
  2. As per G2 "General necessity for a broad hardware stack will fade away as solutions become increasingly cloud-driven, virtualized, and software-defined. “Appliance-attached” solutions will decline in favor of dedicated, pure software solutions performing similar functions.

Infrastructure Journey


On-Premise Infrastructure was only option around 10 years ago but managing On-premise Infrastructure include the extra cost with other challenges, Challenges are Network, Hardware, Cooling, Power, Space also needed technical staff for taking care all infrastructure


The Colocation is when a business places its own server in a third-party data center and uses its infrastructure services. Colocation takes responsibility for Network, Hardware, Cooling, Space also business not need to worry about technical man force for managing servers

Still business have more challenges OS software, Application security, Data storage


The Cloud service provider is providing solutions for all the challenges. The cloud service provider takes total responsibility for hardware, network, space, power, maintaining, and security also they are managing all technical workforce for the whole infrastructure

infra 1

How to Reduce Cloud Cost

Reducing Cloud cost is not a one time task. it is a recurring process. We need to identify underutilized resources, Right size machine, reserving capacity for higher discounts also need to optimization Application for reducing hardware cost. Let's start

Choose the Right Cloud Provider

Cloud infrastructure is increasing day by day. Choosing the right cloud provider is the most important decision for long term success. The big three cloud providers are Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP). These three cloud providers are providing mostly services so they might be confused about choosing the right cloud provider. We can easily evaluate the right cloud provider from the following steps

  • Compliance
  • Security
  • Downtime
  • Support
  • Pricing structure
  • Location wise availability

Discounted Instances

All Big Cloud Providers are providing discounted Instances or spot instances. Spot instances are unused instances. Cloud Providers offered up to 90% discount on these instances compared to on-demand or reserved instances. The majority of organizations have some workloads that are not critical, We can reduce the cost for not critical workload by using spot instances. AWS, Azure, and Google (GCP) all provide the option to use Spot Instances.

  • AWS Spot Instances
  • Azure Low Priority VMS
  • GCP Preemptible VMS

Identify Instance Right Size

Identify the right size for the Instance, not an easy task. We need to configure multiple matrices in our cloud service provider. Key metrics to look for are CPU and memory usage. Identify instances with a maximum CPU usage and memory usage of the month.

How to Check Metrics

Generally, people make mistakes during checking metrics. Most of the people prefer averages in monitoring but averages mislead the measurement. Let understand this by example

You are running an online technology tutorial site. Suppose 1million active users on your website in normal days. Now you are hosting weekly technology webinars in your platform. During webinars time your platform traffic should increase. At that time CPU usages and memory usages should be high compared to the rest of the time. Now suppose you have checked the 24 hours average CPU usages and memory usages. It was around 40% and you have decided this is underutilized and scale down the lower size instance. It can impact you 5% - 10% traffic Let’s look at a real-world example. This chart shows the overall CPU usages

image 1

First Image showing Average CPU utilization. You can see Maximum CPU was 18.6 %

Now, let’s check the CPU 99th percentile: image 2

As expected, the 99th percentile is higher than the average. 99th percentile is around 93%

The conclusion is We need to always check the 99th percentile. The average can mislead and it can impact your users.

Creating Underutilization Alarm

We can create different types of resources and applications utilization monitoring matrix and based on the data we can configure multiple alarms. You can configure notification or alarms on email, SMS from the Cloud provider dashboard. you can also configure alarms that automatically stop or terminate EC2 instances or VM when instance unused or underutilized according to the configured threshold. During the development or some POC as a developer or devops person we have to create some instances or resources but sometimes we forgot to terminate the instances or resources. You can minimize the this extra cost by creating a group of alarms that sends an email notification to developers whose instances have been underutilized or ideal for some hours, then terminates an instance. It will save the overall infra cost. different cloud providers provide different ways for creating these type alarms

Creating time based actions

You can save around 75% cost for your Non - Production Development, Staging, and QA environment. Non - Production environment generally needed during working days. You can turn off these servers during off-hours. Cost-saving depends on the infrastructure size, it can be hundred, thousands of dollars

You can create automation scripts for infrastructure deployment. Schedule the script in your cloud provider

In-memory cache Storage

Application in-memory cache reduces the cost of transferring data in the network and overall application performance because reduce the traffic between the database servers or any other external application reduce the network level cost in the cloud also caching improves the efficiency and accessibility of data that used repeatedly or frequently accessed. Suppose your application is fetching user configuration or settings in every request from the database server. You can keep this type of configuration, which is not changing frequently in the in-memory cache. it will save a lot network-level cost

Data Transfer Cost Optimization

Data Transfer cost mostly hidden or Some time we don't take care of it. Generally, data transfer is free in the same region between different services Storage, Compute service, etc. If you do a lot of cross-region transfer, it will increase your network data transfer cost also if you will deploy multiple services in the same region it will improve application performance

Cost visibility

This includes knowing what you spend in detail, how specific services are billed, and the ability to display how (or why) you spent a specific amount Here, keep in mind key capabilities such as the ability to create shared accountability, hold frequent cost reviews, analyze trends, and visualize the impact of your actions on a near-real-time basis. You can also use cost controls like budget alerts and quotas to keep your costs in check over time.

Consider a Multi-Cloud Architecture

Enterprises or Mid Level companies are adopting multi-cloud infrastructure. Consider this recent prediction from IDC: “By 2020, over 90% of enterprises will use multiple cloud services and platforms.” Or this one from 451 Research: “The future of IT is multi-cloud and hybrid with 69% of respondents planning to have some type of multi-cloud environment by 2019.”

Benefits of multi-cloud Architecture

  • Low latency
  • Competitive Pricing
  • more compliance options
  • Enhanced Security


Organizations need to develop a cost optimization culture and awareness. Cost optimization is an ongoing activity in the organization. Need to decide someone responsible for the cost optimization it can be an Engineering team or DevOps team. Most cloud providers provide billing alarm’s they can alert you in case of cost increment also we can configure budget in the Cloud provider dashboard.

Vijay Singh Shekhawat

Written by Vijay Singh Shekhawat

He is the Lead Product Architect @LoginRadius. He loves working with technology and building something new. He is also a breakthrough thinker, DevOps guy, and cybersecurity enthusiast.

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