Cloud cost optimization emerges as a way to tackle a common challenge in these environments: unused or underutilized resources that lead to unnecessary complexity and consume IT budgets.

In other words, it is a process of mitigating overall cloud computing service costs without negatively impacting their performance.

As the scalability provided by the cloud continues to attract companies, we need to talk more about this. After all, it's very common for cloud migration to occur in a disorganized and unstrategic manner, including when it comes to reducing costs.

That's why, in this content, you will find a guide to help you through this process. Here's what you'll see:

• What is cloud cost optimization?
• What most contributes to unnecessary cloud costs
• Why is optimization important?
• Three main tips for optimizing cloud costs

Happy reading!

What is Cloud Cost Optimization, after all?

First, it's essential to understand why cloud cost optimization has become a market necessity.

Even though cloud computing operates on a pay-as-you-go model, where clients are billed for the cloud resources they choose, cloud service providers (CSPs) can charge customers regardless of whether those resources are effectively used or not. In other words, if you select a resource and don't use it, you will still be paying for it.

With this logic, many companies end up acquiring resources that are often unnecessary for their day-to-day operations and later struggle to monitor this ecosystem. The result? A cloud environment that becomes increasingly bloated and complex, regardless of whether those resources are being used or not.

Therefore, cloud cost optimization aims to align costs with the organization's actual demands, ensuring that quality or performance is not compromised.

This process typically involves limiting expenses related to over-provisioned resources, unused instances, or inefficient architecture, while also maintaining a careful focus on two key areas:

Components of Cloud Cost Optimization

1) Smart Cloud Service Procurement:

This refers to the possibility of quickly purchasing cloud services by authorized individuals without excessive bureaucracy, meeting urgent demands. For this to work well, IT teams authorized to make the purchase need to understand what is truly necessary for each case and what merely acts as a luxury.

In this context, it is essential to develop robust governance policies for sector purchases, especially for the cloud, so that the maximum utilization of cloud investments is feasible.

• Define clear budgets
• Review budget information
• Take advantage of cost-saving opportunities, such as volume discounts or prepayments with volume commitments
• Monitor performance and cost anomalies
• PTAX Dollar vs. Current Dollar Rate on Cloud Providers

These are just some of the activities that are part of a purchasing governance policy and can help IT teams strategically acquire resources.

2) Cloud Capacity Optimization

This component must be harmoniously associated with the first one, because as the IT team easily purchases resources, it is also essential to establish a continuous evaluation process for these acquired assets.

After all, subscribing to more resources than necessary is common in business operations, often resulting in nonexistent demand for more server capacity or storage.

In this context, continuous monitoring of actually used resources is essential. In practice, this activity can be carried out using cloud automation and monitoring tools, which provide optimized and regular analysis of the cloud environment's performance. This is known as “rightsizing”, meaning on-demand sizing.

Thus, cloud cost optimization aims to address the following challenges:

• Lack of understanding of complex cloud pricing models and services
• Underutilized or unused cloud resources
• Lack of predictability in cloud costs

To achieve this, investing in automation-driven tools to study and evaluate the cloud at large scales is essential.

There is also a demand for skilled professionals who understand the nuances of billing models and the business's operational demands, as well as structured processes that ensure continuous and efficient monitoring of the cloud environment.

3) What Most Contributes to Unnecessary Cloud Costs

Usually, the factors that most generate unnecessary expenses include:

1. Lack of Long-Term Planning: Companies migrate to the cloud without a clear strategy, resulting in uncontrolled costs.
2. Migration of Inadequate Workloads: Transferring all operations, regardless of scale or type, can overwhelm the budget.
3. Lack of Communication Between Departments: Without internal alignment, cloud management becomes chaotic.
4. Absence of Continuous Monitoring: Invisible costs accumulate over time.
5. Misuse of Elasticity: Applying scalability to services that don't need it unnecessarily increases costs.

Have you identified any of these gaps in your company's internal processes? Don't worry! Throughout this article, we will provide you with a path to solve the bottleneck.

Importance of Cloud Cost Optimization

According to IDC's Worldwide Quarterly Enterprise Infrastructure Tracker, spending on cloud infrastructure products reached 33 billion dollars in the first quarter of 2024, representing an increase of 36.9% compared to the same period the previous year.

Similarly, cloud infrastructure expenses already surpass investments outside the cloud, highlighting the ongoing migration to these environments.

Additionally, according to Gartner, global end-user spending on public cloud is expected to reach an impressive 723 billion dollars by 2025.

In other words, the numbers reinforce the exponential growth in the adoption of cloud solutions, with a consequent demand for strategic planning capable of avoiding financial waste and ensuring the maximum utilization of available solutions.

In this context, the practice of cloud cost optimization has become essential. Through it, companies can:

• Reduce Operational Expenses: Avoiding payments for underutilized or unnecessary resources.
• Ensure Budget Predictability: Facilitating cost control and allowing more efficient allocation of IT investments.
• Increase Operational Efficiency: Optimizing resource usage to align with the business’s actual demands, without negatively impacting performance.
• Improve Cloud Governance: Promoting a clear and strategic view of spending and resource consumption.
• Take Advantage of Financial Incentives: Such as volume discounts or prepayments, maximizing return on investment.

Three Main Tips for Optimizing Cloud Costs: How to Do It in Practice

Cloud cost optimization goes far beyond cutting expenses; it's about aligning the contracted resources with your company's actual needs, maximizing the value of investments. Below, we highlight three practical steps that can be applied to achieve this efficiency.

1) Continuously Monitor Cloud Resources

The first step to reducing unnecessary costs is understanding how the contracted resources are being used. Many companies face excessive expenses due to underutilized or idle instances that continue to be billed. To avoid this:

1. Use monitoring tools that provide real-time visibility into resource usage, performance, and consumption.
2. Perform periodic audits to identify resources that can be deactivated, reconfigured, or resized (rightsizing).
3. Implement automated processes to shut down resources that are not in use during off-hours or weekends.

For example, a company that uses servers for data processing can set up automatic shutdown scripts for times when the systems are not being used.

2) Take Advantage of Pricing Models and Benefits Offered by Providers

Cloud providers, such as Oracle Cloud Infrastructure (OCI), AWS, Microsoft Azure, and Google Cloud, offer different pricing models that can help reduce costs when used strategically.

Some best practices in this regard include instance reservations, where instead of opting for on-demand instances, the customer considers reserving capacity for extended periods, which often provides significant discounts. For this, careful planning is essential.

Exploring prepaid payment plans can also be an excellent alternative to reduce costs. Paying for resources in advance can lead to substantial savings, especially for predictable demands.

Taking advantage of spot/preemptible instances also allows for the acquisition of excess capacity at reduced prices, ideal for workloads that do not require continuous availability.

3) Implement Clear Governance Policies and Empower Your Team

One of the most common causes of high cloud costs is the lack of control over resource acquisitions. Creating robust governance policies is essential to ensure that only necessary resources are acquired. To achieve this:

1. Set budget limits for teams or projects and monitor compliance.
2. Create approval workflows for new cloud resource purchases (that are quick), ensuring they align with the company’s strategies.
3. Empower your IT team to identify resources that are essential for operations and eliminate spending on unnecessary "tech frills."

You can also ensure that your development team, responsible for using various cloud services, receives training on how to set up usage alerts and spending limits, avoiding surprises at the end of the month.

Extra Tip: How Prime DB Can Help You Optimize Your Cloud Costs

In addition to offering technology, Prime DB is committed to providing financial peace of mind for its clients, allowing companies to focus on what truly matters: operational scalability.

As a partner of Oracle, one of the global leaders in database solutions and cloud infrastructure, Prime DB combines the expertise of an industry giant with a personalized approach tailored to your business model.

Through Prime DB solutions, you gain access to various benefits, such as:

• Robust and scalable infrastructure
• Advanced security technologies
• Guaranteed compliance
• Specialized technical support

In practice, Prime DB also ensures cloud cost optimization by providing personalized solutions that help adjust resource consumption according to the company's actual demand, avoiding excesses and improving operational efficiency.

Interested in Learning More About Our Cloud Solutions? Contact Our Team!