The Cloud is designed to make your life easier. If used right, it can push your business development into hyperdrive. But do you actually know how much, and how wisely, you’re investing in Cloud services?

Research shows that 35% of Cloud users’ spending is wasted1. That’s a significant hit to any company’s finances. Yet it’s far from unusual. So, why the waste? Most likely, the challenge is that your in-house team lacks specific expert knowledge compared to data specialists, making it virtually impossible to craft a cost-efficient, cutting-edge data strategy.

This article covers 3 key strategies to limit your Cloud spending, in just a few simple steps: calibrating your costs, limiting hidden licence fees and reassessing your architecture.

1. Optimise your Cloud costs to revenue ratio

Do you know how your Cloud costs are billed? Cloud bills are often very complicated, with many line items (sometimes hundreds!). That complexity could mean you’re actually paying more for less. In the past, companies would have a dedicated IT professional managing their server. Things were simpler then: you knew your costs in advance. But that setup hugely disadvantaged small companies requiring multiple servers. Their investments skyrocketed. And technology changes fast, making that new, expensive server obsolete in no time. Now, pay per minute setups for state of the art servers are these small companies’ saving grace. Yet costs can – and will – climb rapidly as your business grows. If your monthly Cloud spend overtakes your revenue growth, you need to understand what’s going on.

Major Cloud providers tend to bill in various formats, leading to gaping variations2 in cost per machine. Providers often opt for a package deal strategy, lowering pricing by some 25% if you fix your usage until the end of the year. While potentially appealing at face value, this is a dangerous road to go down. If you go too high, you’ll fritter away money on unused capacity. A package deal lock-in will also make your flexibility a luxury of the past.

All in all, to start improving your Cloud service, it’s vital to closely monitor your monthly Cloud cost to revenue ratio. That way, you can ensure your Cloud spend stays in line with your revenue, keeping your business development firmly on the straight and narrow. When this ratio has a steady upward trend, it’s time to move on to next step.

2. Limit hidden licence fees

Licence fees are a nefarious hidden Cloud cost. Many businesses don’t even realise they’re racking up potentially avoidable costs with every minute of server time used and every data transfer made. Previously, businesses paid for SQL licences per server, with costs outlined in advance. As their usage increased, so would that cost. Now, though, your business could make that expensive SQL investment a thing of the past.

Today, there are multiple open-source relational and non-relational database alternatives to choose from. They’re just as – if not more – effective and, most importantly, they’re free to use. Making the change from SQL to open-source could bring your company huge annual savings.

Limiting licence fees is a practical, actionable step any business can take to cut Cloud costs almost immediately. But, ultimately, technical due diligence from an expert technology partner is the only way to ensure real impact that guarantees significant cost reductions.

Once you’ve taken hidden licence fees out of the equation, you’re ready to move onto stage 3: fundamentally rethinking your business architecture.

3. Rethink your solution architecture

Now we’ve explored limiting licence fees through switching from SQL to open-source, it’s time to talk maximising performance with customised serverless architecture.

This is where the real saving kicks in. Instead of going for a quick 15% cost save, think bigger. Redesigning your architecture could eventually save you 50 to 75% (yes, really!) in recurring monthly savings, while improving performance drastically.

The Cloud is relatively young and its technological development progresses at warp speed. This means many companies don’t maximise the Cloud’s real potential. Furthermore, not every developer is a data architect who understands how to optimally use a server’s CPU, memory and storage for data processing, resulting in suboptimal configuration.

Of course, that’s a hugely wasteful situation that’ll soon create real strain on your company’s finances. But there is a way to avoid it entirely. If you design your architecture from the ground up, you can take complete control of how and when you spend on your data management infrastructure. By leveraging serverless architecture, using proper Cloud resource sizing and up/down scaling, optimising data storage, and so on, you save by the second in your production environment. Plus, you can schedule development and staging servers to run on a purely as-needed basis.

By building your architecture from scratch, you can tailor it precisely to your unique business demands. That’s no mean feat. It requires out of the box thinking and years of experience in Cloud and software technologies. Yet the results speak for themselves: optimal performance to cost ratios, saving you up to 75% in recurring monthly savings.

1RightScale 2019 State of the Cloud Report from Flexera
2A Cost-Cutting Cloud Optimization Strategy for Your Skyrocketing Cloud Bills, CMSWire