10 Ways to Optimize Your Cloud ROI

Cloud costs are escalating, impacting profits and budgets. According to the 2024 Flexera Cloud Report, approximately 36% of enterprises now spend over $12 million annually on public cloud services, marking a significant increase from the 29% reported the previous year. With an estimated 27% of cloud spend attributable to waste, cloud cost optimization is vital. To do so, organizations must focus not only on cost reduction but also on aligning cloud spending with business goals. 

Cloud ROI comes from implementing effective strategies that balance cost efficiency with business effectiveness. Let’s explore 10 key ways businesses can optimize cloud ROI through various tools and strategies. 

1. Right-size Your Resources

Right-sizing involves analyzing your computing resources and adjusting them for optimal efficiency. Manually sizing instances can be challenging due to the myriad combinations of CPU, memory, graphics, database, storage capacity and throughput options. To simplify this process, consider using right-sizing tools that provide change recommendations across instance families. By doing so, you can reduce cloud costs and optimize cloud usage, achieving peak performance from existing resources. To right size: 

• Assess needs carefully. Evaluate resource requirements thoroughly to avoid overspending. Choose storage classes that align with your organization’s needs, such as standard scalable storage for everyday use or specialized storage disaster recovery. 

• Scale responsively. Embracing dynamic scaling to adjust capacity based on demand fluctuations can be a key step in optimizing ROI in cloud computing. 

2. Adopt a Multi-Cloud Strategy

Adopting a multi-cloud approach, which involves using services from multiple cloud providers, allows organizations to capitalize on the unique strengths of each provider. With multi-cloud, you can: 

• Build custom solutions by selecting from various cloud vendors that offer features and performance capabilities tailored to your specific needs. 

• Overcome vendor lock-in and offer flexible deployment options. 

• Lower costs with scalable public cloud options. 

• Stay ahead with access to innovative technologies from multiple providers. 

• Ensure security and compliance across all workloads. 

• Enhance reliability and minimize downtime by distributing workloads across multiple clouds. 

3. Select Effective Cost Management Tools

To select the right tool, enterprises must define their monitoring needs — whether for specific tasks like network performance or a holistic approach — and then choose between tools from cloud providers and third-party vendors. For instance, vendors like VMware, CloudBolt Software and Snow Software offer diverse tools with varying strengths. Traditional IT service management vendors, such as IBM, BMC Software and ServiceNow, also offer robust solutions tailored to larger organizations. Specialized tools focus on specific areas like cloud cost management (e.g. CloudZero) or hybrid cloud management (e.g. Morpheus). For users of a single public cloud, native tools provided by the service provider may suffice, such as Google Cloud Operations, Microsoft Azure Monitor or Amazon CloudWatch. 

Navigating cloud management complexities will often call for a combination of tools, especially for businesses operating across multiple public clouds or hybrid environments. 

4. Leverage Reserved Instances

AWS reserved instances provide discounted pricing compared to on-demand instances, making them suitable for long-term workloads. While on-demand instances offer flexibility, they often result in higher costs, especially for sustained usage. They also offer improved capacity planning and flexibility, allowing users to adjust their infrastructure as needed. Regular monitoring and utilization management can enhance cost optimization efforts, ensuring efficient resource allocation and maximum return on investment. Here’s a quick overview of which instance can best suit your organizational needs:

5. Implement Auto-Scaling

Auto-scaling, a key feature offered by cloud service providers, adjusts computing resources automatically based on demand, ensuring optimal resource utilization and cost-effectiveness. It enhances performance by providing adequate resources during peak times and scaling down during off-peak periods. Configuring scaling policies determines when and how resources are adjusted, offering efficiency and cost savings. Kubernetes, an open-source container orchestration system, facilitates effective auto-scaling through tools like Cluster Autoscaler, Horizontal Pod Autoscaler and Vertical Pod Autoscaler. Managed Kubernetes services, like those offered by Material, streamline deployment and scaling tasks, freeing users to focus on application management. 

6. Optimize Data Storage

Choose the right storage type by matching storage types to data access patterns. Frequently accessed data should be stored in hot storage, while archival data can reside in cold storage. To elaborate the benefits of different data storages, here is the distinction between the three. 

7. Enhance Security to Reduce Costs

Implementing cloud security measures is crucial not only for safeguarding data but also for enhancing the return on your cloud investment. Key practices include: 

• Efficient Resource Use: Strict access controls ensure that resources are used only by authorized personnel, preventing unnecessary costs due to unauthorized access. 

• Compliance Savings: Regular audits and compliance with industry standards help avoid costly fines and ensure security investments are proactive rather than reactive. 

• Optimized Investments: Continuous monitoring and using cloud-native security tools lower operational costs by reducing the need for extensive manual interventions. 

• Tiered Security Measures: Applying security levels appropriate to the sensitivity of data helps in allocating resources efficiently, aligning spending with actual risk levels.  

• Preventing Breaches: Implementing comprehensive security measures like the Zero Trust model and robust identity management significantly reduces the risk and costs associated with data breaches. 

8. Regularly Review and Optimize Cloud Contracts

Cloud vendors frequently update their offerings. Regularly review your contracts to take advantage of new features and adjust services based on changing requirements. Here’s a quick checklist for things to consider.  

• Define Your Needs: Clearly outline performance, availability, scalability and security requirements, as well as resource needs. 

• Research Vendors: Compare prices, terms and vendor strengths and weaknesses to identify options aligning with budget and goals, providing leverage in negotiations. 

• Request Discounts: Based on volume, loyalty, referrals or promotions, considering longer contracts, or bundled services while ensuring quality and flexibility. 

• Optimize Usage: Utilize automation, orchestration, load balancing and resource pooling to improve efficiency while leveraging analytics to identify optimization opportunities. 

• Negotiate the Extras: Discuss installation, maintenance, support, training, upgrades or customization costs, aiming for reduced rates. Clarify contract terms regarding cancellation, renewal and penalties. 

9. Train and Certify Team Members

Training and certifying team members in cloud security best practices significantly enhances cloud ROI through several key impacts.  

• Reduced Security Incidents: Knowledgeable employees are less likely to make mistakes that could lead to costly security breaches. 

• Improved Efficiency: Well-trained staff can manage and optimize cloud resources more effectively, ensuring cost-efficient use. 

• Minimized Downtime: Skilled employees respond to issues faster, reducing costly downtime. 

• Enhanced Feature Utilization: Employees familiar with cloud features can leverage advanced tools to manage and reduce costs. 

• Accelerated Cloud Adoption: Effective training speeds up the adoption of cloud technologies, quickly realizing investment returns. 

10. Continuously Monitor and Optimize

A vigilant approach to monitoring cloud spending is essential for staying within budget and maximizing your return on investment. By implementing a robust monitoring strategy, you not only streamline various cloud resources, but also receive timely alerts as you approach spending limits, enabling you to optimize expenses effectively. The following are examples of tools that can be adopted for continuous monitoring and cloud optimization. 

• AWS Trusted Advisor: It offers real-time guidance on resource optimization, security enhancement and cost minimization.  

• Google Cloud Platform’s ‘Cost Explorer’: Empowers businesses to analyze spending and make informed decisions for resource allocation. 

• Microsoft Azure: It enables organizations to track costs, optimize resource consumption and manage budgets via cost management tools. 

• CloudHealth by VMware: Serves as a centralized solution for managing costs across multiple cloud providers, enhancing operational efficiency, maintaining security compliance and driving cost optimization efforts. 

Boost Cloud ROI with Material 

At Material, we recognize the importance of optimizing the ROI of cloud-based software development environments through strategic planning and resource efficiency. If you’re aiming to improve your organization’s cloud management, consider partnering with an experienced cloud native solution provider to solve your cloud computing optimization challenges. Our experts will provide you with personalized guidance tailored to your business and boost your cloud ROI. To learn more, reach out today for an initial consultation.