Cloud cost optimization or management is the organizational planning that enables a company to understand and manage the costs associated with cloud technology. This includes, in particular, determining the most cost-effective ways to maximize cloud usage and efficiency. Any public, private, or hybrid cloud infrastructure resources and services referred will have effective management in terms of cost when a well-designed cloud management strategy controls those dynamic and elastic computing environments.

The Benefits of Cloud Cost Management

  • Cost savings: This is the most obvious advantage of cloud cost management. Businesses that take a proactive approach to cloud cost planning can avoid overspending on unused resources and take advantage of volume or advance payment discounts.
  • Predictability: A company that correctly forecasts its cloud computing needs will not be surprised by an unexpected cost increase.
  • Efficient utilization: Keeping a close eye on spending also assists businesses in reducing waste and making optimal utilization of resources they do pay for through techniques such as automatic scaling and load balancing.
  • Improved performance: Right-sizing, or ensuring that the public cloud instances you choose are the right fit for your organization’s needs, is an important cloud cost management strategy. Overprovisioning means overpaying; under-provisioning can lead to poor performance; however, with careful planning, businesses can ensure smooth performance without incurring additional costs.

Here are some of the commonly used cost management methods,

1. Wherever possible, adopt technologies such as Kubernetes and Containers while moving to the cloud.

Containers are lightweight and don’t include operating system images. Compared to traditional or hardware virtual machine environments, containers require fewer system resources. Containerized applications can be easily deployed to a variety of operating systems and hardware platforms. The one-time increase of cost for container migrations will be offset over time by lower usage bills.

2. VM to VM migrations Vs. VM to Container migration to remedy resource utilization and reduce cloud bills.

Lift and shift migrations of VMs, where VMs are moved as-is to cloud environments, are viewed and also, in some instances, promoted as the easiest way to adopt cloud. Enterprise IT teams, who come under pressure to achieve the target to move to the cloud, often take this quick approach. However, there is a significant danger. In private data centers, most servers are over configured with CPUs and memory, as the difference in price for higher configurations is not significant. As a result, the VMs tend to be over configured with resources, and the applications which run in those VMs are generally not the most optimized. When these VMs move as-is to the cloud, similar resources are requested from the cloud providers. Those workloads tend to be very expensive over a period of time to run on the cloud. 

On the other hand, applications that are modernized and moved from a VM native environment to a containerized environment tend to be more optimized and consume fewer resources. These containers can run in Kubernetes environments, thereby utilizing all the features and benefits of Kubernetes. The application workload can now enjoy the benefits of high availability, resilience, elasticity which is now provided by the infrastructure element, making them easy to build and simpler to run. Enterprise often sees a good reduction in the usage bills after they move their workloads from VM to containers.

3. Enable Features like Auto-Scale Up/Down

Auto Scaling allows servers to sleep during periods of low load, reducing cloud costs for businesses that run their own web server infrastructure. Since most cloud providers charge based on total usage, autoscaling (scale up/down based on demands) can help you save money. Autoscaling is a tried-and-true method of enabling resilience by allowing an application to scale up and down to meet demand. Both factors are supported as built-in functionality in Kubernetes deployments.

4. Having a strong observability platform is important to keep the usage in check and avoid runaway bills.

Always keep an eye on your metrics. One must identify the key performance indicators (KPI) for performance management solutions that are most important to your business. This is because when you embrace the cloud and your team becomes more comfortable with it, you will begin to use it more frequently. As a result, you may incur additional expenses. The cloud makes it very easy to spin up new resources, which makes it simple to rack up massive bills. And with poor cloud cost management, there’s nothing blocking them.

When implementing cloud technologies, over-provisioning, data sprawl, and egress charges are all potential pitfalls. Regardless of the stage of your cloud adoption journey, avoiding these pitfalls is critical to success. With proper planning and a solid governance strategy, your organization can avoid shocking charges or, worse, serious security issues.

5. In-built alerts on set thresholds can provide advance notifications on excess resource usages and consequent bills

When a business wants to set up their cloud environment, they can use the resource monitoring and management services to automatically allow them to track the performance of their cloud services and infrastructure. As part of your cloud migration, the organization can even automatically deploy tools that provide resources such as dashboards, monitors, and SLOs. This way, they can set up monitoring before they begin shifting traffic to their new cloud infrastructure. Furthermore, resource management tools make it simple to tag the infrastructure and services you launch in your cloud environment.

6. Shut down unused infrastructure and services

Remember that your previous data center will continue to generate maintenance costs, so turning this off if your migration is successful is critical to saving money in this area. Likewise, if you have multiple environments like DEV, QA, and PROD running, shut down the unused servers/services to reduce costs. 


Optimizing cloud costs is a mindset, not a checklist; you’ll get the best results if you think strategically and set up strong processes and automation to help you stay on track. While some of these measures have a higher initial cost, the cost savings they provide more than compensate the initial costs in the long run. In summary, the following a few measures that Enterprises can adopt to ensure that the cloud bills are under control:

  1. Where possible, adopt cloud-native technologies, including containers and Kubernetes. These technologies would enable the resources to be utilized and relinquished based on the need, thereby ensuring that you pay for what you consume. 
  2. Ensure that the application architecture is adopted to its cloud life (for example, keep all the components that have higher network traffic between them together to avoid egress and similar charges from service providers)
  3. Have a good observability solution in places, which monitor, alerts, and prevent runaway cloud bills.
  4. Have strong processes and automation to ensure that the unused resources are shut down when not in use.

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About the Author

Cloud Migration and Management Cost Overruns

Dr. Anil Kumar

VP Engineering, Cloud Control
Founder | Architect | Consultant | Mentor | Advisor | Faculty

Solution Architect and IT Consultant with more than 25 years of IT Experience. Served in various roles with both national and international institutions. Expertise in working with both legacy and advanced technology stacks and business domains.