Operations | Monitoring | ITSM | DevOps | Cloud

According to Gartner, organizations spent $410.9 billion on cloud services in 2021. In the same year, executives estimated that as much as 30% of their cloud spend was wasted. That’s an aggregate $123.27 billion of waste — money that could go toward innovation, or that could help insulate companies from one of the worst market downturns in years. Organizations face a dilemma: The cloud is essential to modern business, and it’s only getting costlier.

We have a term we like to use when we meet CFOs who have just gotten their biggest AWS bill ever: bill shock. Bill shock is when finance suddenly rings the alarm that the bill is “too high” and gets everyone scrambling to explain what they’re spending money on. It often happens when the bill reaches a new milestone (the first million, ten million, or hundred million) or growth trajectory (it doubled in a quarter!?). The problem with bill shock is that it can be highly disruptive.

Depending on your business reason for migrating to the cloud, you can either move in one go or incrementally. If, however, you prefer to retain some of your operations, app design, or workflows on-premise, you can still do so based on the cloud migration strategies you use. Sometimes, it makes more sense to modify your existing system rather than make too many changes all at once. Cost, data security, and service availability (thus revenue and customer experiences being impacted) are just three concerns.

You're not alone if you have trouble visualizing, measuring, and controlling your IT costs. Whether public or private, cloud computing can add to the cost problem. That’s because cloud computing offers on-demand resources, so misconfigured infrastructure, an overzealous engineer, or a blindsided operations team can do something that leads to a surprise cloud bill at the end of the month. But not so fast. What is cost optimization, and why is it different from IT cost reduction?

Organizations receive high monthly bills from cloud providers with no way of determining why the number changes from month to month or how to accurately predict future spend. More importantly, there is little information to provide visibility if cloud resources are being deployed efficiently or if spend is correlated to business performance.

Amazon Web Services (AWS) provides three types of Elastic Compute Cloud (EC2) instances; On-Demand Instances, Reserved Instances (RIs), and Spot Instances. EC2 On-Demand instances are the default and most expensive instances. RIs and Spot instances offer discounts of up to 72% and 90% on On-Demand instances, respectively. The Reserved Instances are long-term commitments that guarantee you compute power for a year or three. Spot instances fluctuate in price and availability constantly.

More enterprises are adopting cloud computing to ensure that they can accelerate innovation, stay competitive, and enjoy cost savings. This trend has only increased in the last two years with the rise of remote work necessitated by the COVID-19 pandemic. With the rise of cloud adoption, multi-cloud and hybrid cloud deployments are increasing in popularity as well. According to a Gartner survey, 81% of survey respondents are using two or more cloud providers.