7 Cloud Cost Optimization Challenges

November 22, 2019

Cloud Cost Optimization Challenges – Cloud drives everything these days. Cloud technology, and the wide array of cloud platforms available today enable apps and web services to run seamlessly on the cloud.

However, as more and more businesses move their workloads to the cloud, the first pain point they face is high operational cost. 

But how does that happen? The cloud budgets were planned. Resources were allocated.

Some initial sizing was set up and done. But all said and done, costs continue to increase and cause headaches for IT managers.

When starting out on a cloud adoption journey, businesses often miss to set up a framework for cloud cost management. This usually results in cloud waste or cloud sprawl—an uncontrolled proliferation of an organization’s cloud instances, services or providers, which eventually leads to high cloud costs.

Common Cloud Cost Optimization Challenges

  • Cloud Visibility

The lack of visibility is masking security threats. It also leads to a variety of application and network performance issues, including the inability to deliver against service agreements, which has direct cost implications.

According to the “The State of Cloud Monitoring” report released by Keysight, most (95%) pros said visibility problems led to an application or network performance issues, and 99% reported they noticed a direct link between network visibility and business value.

Having a dashboard that shows different metrics means having accurate data to find the optimal level of investment in technology.

The lack of an executive dashboard gives organizations no way to optimize, monitor or organize any of the cloud activities and hence, costs.

  • Over Provisioning 

Provisioning refers to the allocation and management of cloud resources by the cloud provider to its customers. A cloud application development company should be able to anticipate how many resources it will require.

Failure to do this leads to unnecessary cloud costs and inefficiencies. In case of under provisioning, the effect is visible in terms of low performance and high latency of jobs, which leads to poor user experience.

In case of over provisioning, clusters are flooded with servers and several cloud resources remain idle. The cloud resource user will be forced to pay for these unused resources anyway leading to unnecessary costs.

  • Poor Cloud Architecture 

While developing a cloud application, few software architects have the knowledge of designing and building a cloud application architecture.

Furthermore, they rarely take the pain of taking into account the costs associated with specific application features. For example, the cost of a certain query for a widget installed in a web application may cost thousands of dollars.

This lack of skills and experience often leads to applications that are poorly designed for cloud-based platforms, thus failing to deliver the true value of the cloud platform.

  • Lack of Accountability

With the absence of individual login credentials, any user can login to the cloud platform at anytime and may add/delete/modify operations.

Due to this nature of anonymity, it is very difficult to figure out who modified what and when. This has direct security and cost implications on the company.

For example, a malicious insider may attempt to transfer a sensitive file/data to someone outside the cloud via email or a pen drive.

If the cloud administrator is not well-equipped to know when, where, how and what was being leaked, and by whom, it turns out to be a problematic process to investigate insider jobs.

  • Budget Forecasting

Most cloud platforms, like AWS, provide auto scaling feature to control cloud cost by adjusting capacity.

However, they find it difficult to forecast cloud costs when there are plans to introduce new services/apps, business demand for existing services change, and when the software efficiency fluctuates on existing services.

The forecasting is complex, and it requires setting up process and workflows, deep expertise, and the right data.

  • Cloud Governance & Policies

Misaligned approach between your teams/departments can be a hurdle that can make or break your cloud cost optimization efforts.

When each team or department tries to follow their own method for managing cloud resources and cost, the result is more focused towards organizational change, rather than technology implementation.

This can be difficult and tricky to manage, especially if the teams are not on the same page in terms of cost optimization.

  • Billing Complexity

This refers to the complexity caused by the constantly changing billing practices of most cloud service providers, and the invoices they provide.

Considering all the possible cloud configurations created while developing business solutions, cloud providers usually have a lot enlisted on single invoice. 

The point is – if you cannot make sense of your bill, your cost optimization efforts will go in vain.

All these challenges imply that organizations are wasting significant amount on their cloud environment, which can otherwise be saved. 

According to a report by RightScale, companies are wasting about 30 percent of the money they spend on the cloud.

Cloud Cost Optimization - % of cloud spend wasted

In most cases, these companies can save up on a lot of money by using the right optimization tool to monitor and track their usage and activities and cut down on the cloud costs.

Automation, containers, serverless services, autoscaling features and the many management tools offered by the cloud vendors also go a long way in cutting cloud costs.

Cloud Cost Optimization Techniques

Cloud resources and hence, costs can be optimized by taking certain steps. Here are the most effective ways to optimize your expenditure over the cloud:

  • Instance Management

In theory, not closing an unwanted instance is equal to leaving the lights of a room on, when not in use.

These unnecessary instances, or rather “zombie” instances may continue running 24/7, even though no one is actually using them overnight or on the weekends and add up to your bill.

  • Instance Type & Right Sizing

Often when companies are not well aware of all kinds of instances and functionalities, they end up using a wrong instance for their application.

Therefore, it is of prime importance to know about the various instances offered by the cloud service provider before deploying your service.

  • Cloud Pricing Plan

Reserved, spot instances or another discount program could save a lot of money for cloud users. Buying in bulk assures of a lower cost than buying bits and pieces.

Always be on the lookout for potential price reductions and discounts and grab the opportunity before it ceases to exist.

  • Effective Storage Management

A centralized storage management is being implemented in most organizations today because of its multiple benefits.

It is much easier to manage and monitor cloud usage using a central server. Cloud services must have policy enforcement to reduce the risks that inevitably come from decentralized acquisition of cloud services.

  • Using Serverless Computing

Serverless computing services, such as AWS Lambda, take away the need for developers or other IT staff to configure or manage cloud instances.

The developer simply writes the code for the application, and the cloud service handles all the details of infrastructure deployment. That saves a tremendous amount of time, which in turn, reduces operating expenses. 

  • Deploy containers

Containers have become an integral part of deployment and testing process of all IT products because of the various benefits such as efficiency, simplicity, maintainability, portability and multi-cloud platforms.

The most popular containers in use today are Kubernetes and Docker.

Often used by IT teams taking DevOps approaches, containers package applications together with all their dependencies, making them easier to deploy, manage and/or migrate from one environment to another. 

In fact, about 78 percent of those surveyed by RightScale were using or planning to use Docker, and 63 percent of those surveyed were using or planning to use Kubernetes.


Cloud cost optimization can be achieved by planning your cloud resource utilization, smart selection of cloud features, optimizing cloud performance along with following the practices mentioned above.

In addition to these, partnering with the right managed service provider can further contribute to significant cloud cost savings.

          For more, see: 7 pillars of cloud cost optimization