We have seen many businesses make significant shifts toward cloud computing in the last decade. The Microsoft Azure public cloud offers many benefits to companies, such as increased flexibility, scalability, and availability of resources. However, with the increased usage of resources, implementing best practices in cloud efficiency is a necessity to validate spending and avoid waste.

What is cloud efficiency? It is the capacity to utilize cloud resources in the best possible way, and at the lowest possible cost while, at the same time, minimizing the waste of resources, and thus of energy and carbon emissions. It’s a combination of cost—how you handle and govern your cloud infrastructure, carbon—how you can keep carbon emissions at a minimum, and energy—how the application uses electricity, and how you can optimize these three areas to make the cheapest, more modern, efficient, and sustainable application. In this post, we will explore why you should immediately start your cloud cost management and governance process.

Cloud cost optimization is essential for companies as it directly impacts their bottom line and OPEX expenses. The cost of cloud computing can quickly add up, especially for businesses with a high volume of data or high traffic, and mission-critical applications.

Cloud cost optimization is what makes workloads more efficient, but what are its benefits?

• Understanding, measuring, optimizing, and tracking your cloud costs. Having full control of your monthly bill should be your primary goal.
• Reduce carbon emissions. Cloud computing consumes a significant amount of energy, and the increased usage of cloud resources has resulted in a substantial increase in carbon emissions. Cloud providers are taking steps to reduce their carbon footprint, but businesses can also play a significant role in reducing carbon emissions by optimizing their cloud resources.
• Improve the performance of applications. This can significantly impact user experience, as slow or unresponsive applications can lead to frustrated customers and lost revenue. By optimizing cloud resources, companies can ensure that their applications run smoothly, improving customer satisfaction, and decreasing cloud spend.
• Saving on your application’s cost in a systematic way can give you a budget for additional features, refactoring, and innovation.

The four main cloud cost optimization strategies are usually:

1. Right sizing

Right-sizing is probably the most important aspect of controlling cloud costs. The impact is not simply saving money—in many cases, there is a balance between performance and spending and, more specifically, between meeting your internal customer service-level agreements (SLAs) efficiently. You need to find this balance to keep both your application managers, financial operations (finops) team, and cloud team happy.

2. Clean-up

Another important part of cloud computing cost saving is cleanup operations. When dealing with many workloads or complex projects, lots of resources are created just as a transitional step and are often forgotten about and paid for. This is particularly valid during lift and shift migration where customers choose to initially match resources that were in a fixed, non-flexible environment, ending up with overallocated services. Cleaning up unused items—as a first approach—represents one of the short-term, quick wins for cost-saving. When inserted into a recurring process, this will also help you uncover any unassigned or unutilized infrastructure (with operational downfalls) and, in general, uncover gaps in your processes that might have a wider impact than costs. You should plan to periodically assess the evolution of your infrastructure for any resources that may have been left unassigned and add this to your technical debt management operations.

3. Azure reservations and savings plans

These are a 1- or 3-year commitment to specific Microsoft Azure services or compute use. In exchange for this, significant cloud computing cost savings are granted. This is a very important area of cost governance, as it can amount to very large savings, even though it has practically zero impact on the carbon footprint. We recommend using reservations and savings plans once the right-sizing and cleanup processes have successfully started and periodically track and adjust their usage to match up to 100 percent of your requirements.

4. Database and application tuning

We often see customers migrate applications that rely on legacy databases. Sometimes, even cloud-native applications are developed using old data handling patterns, mostly because companies have a history that needs to be retained and cannot be wiped out by switching to a new database. But a large, stratified database that was doing well in an on-premises environment, has immediate drawbacks in the cloud—queries may be slow and resource-intensive, and data is uselessly exchanged and in large quantities which all adds up to the monthly bill. Optimizing the database so that the application is leaner and faster will also save you money by downsizing the original infrastructure and using fewer data and networking resources.

Having fully optimized your databases can, sometimes, not be enough. Your freshly migrated application came from one of the cloud migration patterns—lift and shift, refactor, rearchitect, and rebuild. Their cloud efficiency is higher when applications are designed for the cloud, as they will utilize all the flexibility and scaling of infrastructure as a service (IaaS) and platform as a service (PaaS) services, with the result of higher performance and lower costs. Investing some of the savings from your cloud cost reduction exercise will not only improve your application performance but in the end improve your overall cloud resource optimization.

What can you do to kickstart your cloud computing efficiency today:

Start your recurrent cloud cost management meeting this week. Make sure to invite all the stakeholders—the cloud and finops teams, your finance controller, and anyone in your company who is dealing with cloud costs directly or indirectly.

Search for quick wins (cleaning up, downsizing, optimizing logs or backups, and more) so that this will fund the upcoming wave of cost-saving tasks and the refactoring and innovation of your applications.

In conclusion, cloud computing efficiency is a crucial element for any company that is operating in the cloud. By adopting cloud spend optimization practices, businesses can reduce their overall cloud spend and carbon emissions, improve the performance of their applications, and finance future elements of innovation.

Learn more

If you’d like more on optimizing your Azure costs, download the full e-book The Road to Azure Cost Governance by Paola Annis and Giuliano Caglio.