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Cloud cost optimization techniques for enterprise apps

While cloud is known for its cost-efficiency, the savings don't always come easy. Follow these three steps to optimize your cloud application costs.

Users planning a cloud deployment can control costs in many ways, through effective development or migration plans....

And while upfront planning can't benefit businesses that already have apps in the cloud, that doesn't mean they're sunk. To reduce cloud costs, enterprises can follow a few simple steps. And the benefits can carry an organization well into the future.

Step one: Understand your app's TCO

The first step is to fully understand your application's total cost of ownership (TCO). If you don't have a solid target, it's difficult to optimize any cloud computing cost. And no cloud cost assessment is complete without all the cost elements. Cloud computing costs include the service cost and cloud application support costs, which are major sources of savings.

Most cloud users deploy their applications on infrastructure as a service (IaaS) , which is a form of hosted virtualization. Users still have to purchase software licenses, build machine images and support application operation in the cloud. IaaS only reduces the capital cost of equipment, its maintenance and facilities' costs. On the other hand, platform as a service (PaaS) and software as a service (SaaS) can displace more costs. Therefore, if non-service costs make up more than one-third of your TCO, consider other cloud hosting options.

Because IaaS users can incur most of their non-service costs maintaining application images for cloud deployment, look closely at the process. Remember, application lifecycle management costs typically include the cost of constantly refreshing operating systems and middleware tools. PaaS or SaaS eliminates those costs, and SaaS also eliminates application licenses and update costs.

Step two: Perform a cost and benefit analysis

Secondly, in order to analyze the costs and benefits of your cloud services, break down the services' costs by feature. Cloud services typically involve shared hosting of basic machine images with minimal data storage. Many cloud providers advise users to buy additional capabilities, and many users will. For example, many purchase dedicated hosting, which reduces cloud's economies of scale and increases total cost. Additionally, many users purchase RDBMS storage and either don't use it at all, or use it when on-premises storage is cheaper.

Consider each cloud feature you pay for and ask why. To eliminate the need for certain features, it's useful, in some cases, to make changes to the application itself. In other cases, run a pilot test before introducing a new feature to ensure it adds as much value as cost.

The most misused cloud features relate to availability, such as reserved instances and availability zones. Many companies add these features without testing basic cloud services' performance levels. If your cloud costs include these features, and you can't find testing records to validate your need for them, run a pilot test to select only the features that add significant value.

Remember, some cloud features are also under-used. Nearly all cloud services charge for data in and out of cloud applications. This includes access to on-premises application components and databases. For hybrid clouds that divide applications between public cloud and on-premises, look at the charges for data inside and out of apps. To reduce the number of data flows, and their size, consider moving some data storage into the cloud or restructuring your application workflow.

Discounts are also sometimes underused. Many cloud providers offer volume discounts or discounted features as part of a package. Choosing an arbitrary feature when a discounted equivalent is available can limit cost savings.

Step three: Research cheaper alternatives

The final step to cost optimization is often the one many users consider first: look for better cloud pricing elsewhere. If you compare cloud prices on a service-for-service basis, you'll generally find that major providers are fairly competitive. However, it's possible that some cloud providers design their services for specific customer types and offer discounts to reflect their targets. For example, network operators may be very competitive with cloud services sold over their own VPN, but less so if they're used for Internet-based access.

Smaller cloud companies, particularly startups or privately owned firms, may offer lower service costs than major providers. However, sometimes these companies are more of a financial risk. If an off-brand cloud can save you a significant amount, plan your applications and migration so that you can quickly move to a larger cloud provider if need be.

Mobility provides pricing power, whether it's the ability to change providers or the ability to change cloud features. Whenever you make a change to your cloud service, don't limit your future mobility. You don't want to lock yourself in as the cloud market changes.

About the author:
Tom Nolle is president of CIMI Corp., a strategic consulting firm specializing in telecommunications and data communications since 1982.

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This was last published in June 2015

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Essential Guide

Developing cloud applications in the new IT era

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