The increasing prevalence of the hybrid work culture has undeniably made cloud storage an essential requirement, as numerous organizations have widely embraced it. However, this rapid adoption has brought forth certain obstacles, most notably the significant rise in expenses related to cloud services, which should be considered.
Elements like storage, data transfer, and more play crucial roles in determining the overall cost of using cloud services. For organizations aiming to reduce the financial impact of relying on cloud infrastructure, it becomes essential to optimize these aspects strategically.
This blog aims to offer organizations an all-inclusive collection of strategies to traverse the complex landscape of cloud expenses effectively.
Cloud storage, managed by third-party providers, securely stores data on offsite servers. This remote storage solution allows users to effortlessly upload, store, and access data using an internet connection, delivering convenience and flexibility to both individuals and businesses.
In essence, envision cloud storage as accessing storage resources over the internet, much like how you tap into electricity from a power grid. Instead of owning and maintaining physical servers and equipment, you can rent and utilize storage from a remote location, often referred to as "the cloud."
Over recent years, the adoption of cloud services has surged significantly. O'Reilly's Cloud Adoption Report indicates that over 90% of organizations have embraced the cloud. This upward trend can be credited to its many benefits, including:
Certainly, as organizations increasingly adopt cloud services, managing cloud spend becomes a critical challenge. Report from Flexera underline the prevalent struggles: 82% of organizations require assistance in managing cloud expenses, with 32% of the cloud budget deemed wasteful. Moreover, CloudZero highlighted that 7 out of 10 organizations lack clarity on their cloud expenditure. These figures underscore the crucial need for accurate cost distribution in cloud usage due to the numerous hidden costs associated with cloud services.
Managing cloud costs, also known as cloud optimization, involves overseeing and maximizing cloud resource usage to meet business objectives effectively. This comprehensive approach spans the entire lifecycle of cloud infrastructure, encompassing resource provisioning, vigilant monitoring, adaptable scaling, and continual optimization. The ultimate goal is to ensure optimal performance while maintaining cost efficiency by aligning cloud resource utilization with specific organizational needs and financial constraints.
Mentioned below are some common reasons highlighting the significance of effective cost management:
Now that we know the importance of effective cost management strategies, let us look at the significant components of the overall cloud bill.
Compute costs are directly related to utilizing computing resources in the cloud, encompassing virtual machines (VMs), containers, and serverless computing platforms. The expenses are determined by the processing power (CPU), memory, and other resources necessary for executing a particular workload.
Factors that influence compute costs include
The expenses related to storing data in the cloud are called storage costs. These costs are influenced by various factors, including the type of storage utilized, such as object storage (e.g., Amazon S3), block storage (e.g., Amazon EBS), or file storage (e.g., Amazon EFS), as well as aspects like storage capacity and data access patterns.
Several factors contribute to the variation in storage costs:
I/O (Input/Output) and network expenses refer to the costs of transferring data to and from the cloud. These expenses encompass data transfer between regions, availability zones, or external networks.
Certain factors influence these costs:
Organizations are charged based on the volume of data stored, meaning the higher the data volume, the higher the cloud bill. As businesses generate and accumulate more data, the cloud bill escalates accordingly. However, beyond these obvious costs lie unexpected expenses, referred to as hidden costs, associated with cloud storage.
Hidden costs in cloud storage extend beyond the evident charges linked to utilizing these services. These expenses might not be immediately apparent, underscoring the importance for businesses to thoroughly assess their usage patterns and the terms outlined in their cloud service agreements.
The impact of storage costs on the overall cloud bill was further highlighted in a study by Virtana titled “The State of Hybrid Cloud Storage.” Based on interviews with 350 cloud computing decision-makers, the report revealed significant insights into the implications of storage expenses.
The survey findings revealed a staggering 94% acknowledgment of increased storage costs among participants, with 54% confirming faster growth in storage expenses compared to their overall cloud spending. This underscores the substantial impact of storage costs on organizations' financial health, emphasizing the need for strategic management in this area.
Several hidden costs in cloud storage were identified:
A comprehensive storage audit for major market players showed storage expenses constituting 40% of their total cloud investment. Further investigation into Azure and AWS revealed intriguing insights. For Azure, only 35% of disk storage was utilized, indicating substantial overprovisioning of 65% of disk space.
Similarly, during our analysis within the Amazon Web Services (AWS) cost framework, an interesting finding emerged: 15% of the total cloud expenditure incurred by the company was attributed to the utilization of Elastic Block Store (EBS). Additionally, our observations indicated average disk utilization rate stood at 25%.
In our analysis of various scenarios, organizations experienced downtime at least once per quarter despite overprovisioning their resources to maintain application uptime. This situation resulted in cloud wastage, characterized by ineffective use or distribution of cloud storage resources, leading to avoidable expenses and underutilized storage capacity. Cloud wastage can take diverse forms, causing businesses relying on cloud storage services to incur unexpectedly high costs.
During comprehensive storage audits for prominent organizations, we identified common issues contributing to cloud wastage, including:
So, as we can see, the prominent reason for storage-related costs, regardless of the cloud service provider you are using, is overprovisioning. But this tendency is understandable.
Effectively managing storage requirements often requires the creation of a custom tool due to the limited range of features provided by Cloud Service Providers (CSPs). However, this tailored approach requires significantly increasing DevOps efforts and time investment.
Conversely, relying solely on CSP-provided tools may lead to a suboptimal process that is highly manual and resource-intensive, rendering it impractical for daily, continuous use.
As a result, a dilemma arises wherein over-provisioning becomes an acceptable compromise to ensure uninterrupted uptime of critical applications, considering the significant impact these complexities have on day-to-day business operations.
However, overprovisioning incurs additional expenses when they have excess or insufficiently utilized storage capacity, resulting in increased costs. As per a report by StormForge, a significant portion of respondents said that 48% of their cloud spend is being wasted, with over-provisioning and cloud complexity being the leading causes. Additionally, financial resources that could have been directed towards essential business endeavors are invested in idle storage capacity, indicating a misuse of funds amounting to $17B annually.
Understanding and rectifying cloud wastage is paramount. While optimizing computing resources is vital for immediate application performance, neglecting storage efficiency is a common oversight. Often, organizations prioritize compute expenses due to their direct impact on application responsiveness, inadvertently overlooking the significant impact of storage optimization. Yet, delving into storage-related factors and optimizing cloud costs are equally crucial. This involves implementing strategies to monitor, analyze, and fine-tune cloud resources, ensuring cost-efficiency across the entire cloud infrastructure.
Proactively addressing hidden storage-related costs and optimizing storage resources can effectively alleviate the financial strain caused by inefficient cloud storage utilization.
The aforementioned hidden costs make it important to understand and implement strategies to reduce the overall cloud bill. But before we dive into strategies to reduce costs associated with cloud storage aspects, we must understand the different types of cloud storage.
Now that we know the different types of cloud storage, let us look at their pricing components and hidden costs. Beginning with block storage, a range of factors determine the pricing structure of block storage, and users are invoiced according to their usage of these features.
While these components profoundly impact the cloud bill, it is essential to note that the cloud-specific pricing and type of block storage volume change with time. Hence, it would be advisable to check the pricing page.
Now that we know the different pricing factors in block storage, it is essential to understand its hidden costs before we move ahead with optimization.
Optimizing block storage is crucial for achieving a lean and cost-efficient cloud infrastructure. This optimization goes beyond a cost-cutting approach; aligning cloud resources with actual usage is necessary, guaranteeing businesses pay only for their needs. You can optimize your block storage in the following ways.
Monitoring block storage in the cloud is pivotal for efficient cloud resource management. Continuous monitoring provides invaluable insights into storage usage, aiding in recognizing inefficiencies and optimizing resource allocation. It's crucial for capacity planning, ensuring storage resources align with real-time demands. Let's dive into understanding how Amazon CloudWatch can be used to monitor storage resources:
Amazon CloudWatch, an Amazon Web Services (AWS) offering, is an observability and monitoring service designed to collect, monitor, and manage diverse metrics and log files. Its primary goal is to provide comprehensive insights into the operational health and functionality of various AWS resources, applications, and services. CloudWatch supports a wide array of AWS services, enabling users to:
By utilizing Amazon CloudWatch, you can gain a comprehensive view of your AWS infrastructure's health and performance, including block storage resources. This monitoring capability empowers you to proactively manage and optimize storage resources, ensuring they are in line with your application's demands and optimizing costs by scaling resources as needed.
Follow the steps below to set up Amazon CloudWatch alerts to monitor usage metrics.
Using monitoring tools can be challenging for the DevOps team, as it requires considerable labor and can incur additional costs during deployment. As storage environments become more complex, there is an increased risk of things getting out of control quickly. The growing intricacy poses significant challenges to effective monitoring, demanding substantial time and resources to address accordingly.
This is where you can find the right solution in an automated process like the one Lucidity Storage Audit offers. The Lucidity Storage Audit is an all-inclusive and user-friendly tool that simplifies monitoring and provides a complete view of storage with a single click. Designed to streamline your cloud management, our Storage Audit can transform your storage resource management experience through seamless automation. It empowers you to analyze spending patterns, identify areas of resource inefficiency, and reduce the risk of downtime.
The Lucidity Storage Audit offers invaluable insights in three crucial areas:
Managing storage resources manually indeed introduces various challenges, especially as cloud environments scale. Here are some of the issues associated with manual provisioning:
Many organizations are turning to automated solutions to overcome these challenges and streamline storage provisioning. Automated provisioning eliminates human errors, ensures consistency in configurations, and significantly reduces the time required to allocate and configure storage resources.
How can this be automated with Lucidity?
As you can see, manually provisioning storage resources is challenging and full of problems. Understanding this, we at Lucidity developed an industry-first autonomous storage orchestration solution, a block storage auto-scaler.
Effortlessly streamlining the expansion and contraction of storage resources without the need for any code changes, Lucidity Auto Scaler offers unparalleled benefits. Here are the key advantages it provides:
Removing idle or unused volumes is advisable to optimize costs and ensure efficient resource allocation. Deleting such volumes helps avoid unnecessary expenses incurred in storing inactive data. By doing so, you can ensure that you're only paying for the resources you truly require.
Once you have the required insights about idle or unused resources and volumes through Lucidity Storage Audit, delete them. Follow the steps mentioned below to delete idle/unused or independent volumes.
Similarly, to minimize storage expenses and accurately allocate resources, it is essential to remove unnecessary old snapshots. You can streamline costs and guarantee payment solely for your current storage by eliminating outdated snapshots. Follow the steps below to delete snapshots.
Now that we have covered cost optimization for block storage, let us move on to object storage. Following are the pricing components associated with object storage that impact the overall cloud bill.
Now that we know the pricing factors associated with object storage that impact the overall cloud bill let us talk about the hidden object storage-related costs that can impact the cloud bill.
Mentioned below are some ways you can optimize object storage to reduce overall cloud costs.
AWS S3 Intelligent Tiering presents a cost-effective storage solution within the AWS S3 ecosystem. It automates data organization across different storage tiers, eliminating the need for manual object management and reducing the risks of human error.
Unlike other storage choices, AWS S3 Intelligent Tiering does not add additional costs for accessing objects. Instead, users are only charged a minimal fee of $0.0025 per 1,000 objects for monitoring and automation. The total cost of cloud storage depends on the tier assigned to the data, which can include archival tiers if required.
By utilizing S3 Intelligent Tiering, startups, and AWS users can avoid unnecessary expenses associated with AWS S3 storage. Many users typically default to the standard S3 Storage tier, resulting in potential overpayments of up to 70%. S3 Intelligent Tiering is vital in optimizing AWS S3 costs, ensuring that data resides in the most cost-efficient storage tier, ultimately leading to significant savings.
AWS S3 Lifecycle policies provide an automated framework that helps manage the lifecycle of objects within your S3 storage. This framework offers various advantages, including cost optimization, improved data protection, and ensuring compliance by defining how objects transition between storage tiers or specifying deletion timelines.
By utilizing AWS S3 lifecycle policies, you have precise control over the timing of object transitions between storage tiers. This allows for effortless movement of infrequently accessed data to archival S3 tiers. Moreover, the inherent automation in these policies facilitates the identification of objects set for expiration or deletion, eliminating the need for manual oversight.
The implementation of AWS S3 Lifecycle policies brings two significant benefits. Firstly, it enables automatic cost reduction as data becomes less relevant to your application. When data becomes older or is accessed less frequently, it can be automatically shifted to more economical storage layers, leading to noticeable cost savings. Additionally, the automated process minimizes the possibility of human mistakes, ensuring that less critical data does not remain in expensive storage tiers.
Like for optimizing block storage, you can use CloudWatch alerts to monitor usage metrics. By leveraging this tool, you can gain real-time visibility into your S3 usage and receive prompt alerts whenever certain conditions are fulfilled. This proactive methodology empowers you to tackle potential concerns swiftly, thus guaranteeing optimal performance and cost-efficiency for your S3 storage.
Take, for instance, to ensure timely awareness of your S3 bucket's storage capacity nearing a predetermined threshold, an alarm can be established using the S3 bucket size metric. This alarm will facilitate notifications whenever the storage size approaches or surpasses the predefined capacity. Such proactive monitoring mitigates the risks of reaching storage limits, enabling smooth operations.
Another example of how CloudWatch alerts can help you monitor usage metrics is to ensure prompt notification about any sudden spike in S3 request latency; you can configure CloudWatch alarms for latency metrics. This proactive measure enables timely identification of performance concerns and facilitates necessary remedial steps. For instance, you can investigate the underlying cause or optimize your S3 configurations to enhance overall performance.
Furthermore, you can also enable Cost Explorer or download reports about your S3 buckets to stay informed about your usage costs. AWS Cost Explorer is an Amazon Web Services (AWS) tool that enables users to effortlessly visualize, comprehend, and examine their AWS expenditures and utilization throughout a specified duration. It offers the following features.
For optimal cost management and up-to-date information, it is advisable to consolidate your Amazon S3 buckets with your Amazon EC2 instances in the same AWS region. When these instances and buckets are located in different areas, not only does it result in higher data transfer expenses, but it also introduces performance drawbacks. To address these concerns, ensure that both services are configured within a unified AWS region, enabling cost-efficient and unhindered data exchange.
S3 versions offer valuable benefits such as data protection, compliance support, and recovery from accidental deletions or overwrites—however, AWS charges for every version of a data object that is stored and transferred. You will be billed for them all if you have multiple versions of an object. In the following ways, you can prevent increased object storage costs due to S3 versioning.
The data size does not determine the cost of using the Amazon S3 API but rather the type of API call used. The cost remains the same whether you upload a large or small file. However, the overall cost can quickly increase if you upload multiple small files. To minimize this cost, a practical solution is combining multiple small objects into one file with the tar utility. This allows for bulk uploads instead of incremental chunks, reducing the number of S3 API calls and, subsequently, reducing overall costs. This approach optimizes the efficiency of data transfer operations and promotes a more cost-effective use of Amazon S3 resources.
Now you know some of the most effective strategies to optimize your block and object storage and cut down on overall cloud bills. Let us show you how Lucidity helped one of many organizations identify cloud wastage and take prompt actions to reduce overall cloud bills.
Uniguest, a prominent company specializing in digital signage and engagement technology, had relied on Azure as their chosen cloud service provider for quite some time. However, effectively managing the complexities of their cloud storage environment became a significant challenge for them. To enhance their cloud cost optimization efforts, they approached us with a specific obstacle: the urgent requirement for comprehensive visibility into their storage parameters.
Gathering utilization data individually from various disk drives had become arduous, and the prospect of deploying costly monitoring tools only added to their concerns. Recognizing the labor-intensive nature of manually tracking storage usage, we took it upon ourselves to conduct a thorough audit.
We deployed Lucidity Storage Audit, an easily accessible and preconfigured tool that simplifies the storage auditing process. By leveraging Azure's internal services, Lucidity Audit provided essential insights into disk usage and health, enabling smooth cost optimization and prevention of downtime.
With just one click, our agentless audit process uncovered a shocking overspend of up to 71% in Uniguest's Azure storage. The main culprit behind this excessive expenditure was the under-utilization or over-provisioning of resources, accounting for 95% of the wastage. On average, disk utilization stood at a mere 22%. The remaining 5% comprised idle and unused resources, primarily caused by storage that was either not connected to a virtual machine or associated with a stopped VM.
We leveraged the audit report to implement Lucidity Auto Scaler—an agent-based architecture with an auto-scaler that is an additional layer over Azure's cloud infrastructure.
The deployment process of the auto-scaler was straightforward, requiring just three clicks. Once activated, it seamlessly adjusted storage capacities, optimizing disk utilization within a targeted 70-80% range.
This proactive strategy proved instrumental in drastically reducing overall storage costs while providing the agility to accommodate workload spikes or sudden surge in traffic effortlessly. We achieved this by rapidly expanding disk storage within a mere minute.
The outcome was exceptional, with a 59% decrease in storage expenses and a significant improvement in disk utilization, bringing it within the targeted range of 75%-80%. This demonstrated that Lucidity optimized costs and ensured optimal resource utilization within Uniguest's Azure environment.
Proactive management entails aligning cloud storage resources with an organization's strategic objectives. Its primary objective is to customize the storage infrastructure to effectively support and enhance critical business processes, applications, and services. By constantly adapting to evolving business needs, technological advancements, and industry trends, proactive management ensures the agility needed to remain competitive in a rapidly changing environment. To achieve this, optimization efforts focus on several key aspects. These include right-sizing storage resources, leveraging suitable storage classes, and implementing data lifecycle policies. These practices allow storage resources to be utilized optimally, avoiding overprovisioning and reducing unnecessary costs.
If you are struggling to control your cloud cost and are suspicious that storage resource usage might be the culprit behind it, then you should consider reaching out to us at Lucidity. With a quick demo, you will get to know how you can identify the cost saving opportunities and how automation can bring down your cloud cost.