Cloud computing offers a scalable and cost-effective way to run your business, but even the most powerful tool can be misused. In my conversations with over 50 FinOps and DevOps practitioners over the past 6 months, I've identified some common mistakes that can lead to cloud bill inflation and surprise expenses. This is especially true for large organizations with multiple business units, applications, and products running on a complex multi-cloud environment.
Common Mistakes
Here's a breakdown of these pitfalls and how to steer clear:
- Not setting budgets or tracking your spending: Many organizations excel at setting budget limits and alerts, but often this focus is limited to the business unit level. Granular budget tracking, down to the product, application, or even team level, brings significant advantages. This finer-grained visibility empowers you to identify spending trends and optimize costs with greater precision.
- Tagging Troubles: While most companies today implement some level of tagging, there's still room for improvement. Inconsistent tagging practices, like having multiple variations for the same environment (e.g., "Prod," "prod," and "Production"), and a lack of a defined strategy for allocating costs to untagged resources, can lead to significant confusion and hinder cost analysis.
- Reserved Instances and Savings Plans: Leaving Money on the Table: Reserved Instances (RIs) and Savings Plans (SPs) offer significant discounts for committing to cloud resources for a specific period. Companies in growth stages or with fluctuating workloads might shy away from RIs or SPs fearing a bad fit.
- For RIs, consider convertible reserved instances instead of standard RIs. While they offer slightly lower discounts, the flexibility to switch instance families, configuration and operating system provides peace of mind. Remember, even with a convertible RI, you'll still be saving compared to on-demand pricing.
- With Savings Plans, the fear might be around committing to a higher compute usage level. The solution? Start small and gradually increase your commitment coverage as your usage stabilizes.
- Pricing Mysteries: A clear understanding of the pricing model for each service you use is crucial. Not grasping how billing works for a particular service is a recipe for inaccurate forecasts and unexpected spikes in your monthly bill. When in doubt, consult the official billing documentation or reach out to your Trusted Account Manager (TAM) before deploying any new service.
- Zombie Resources: Don't Let Them Drain Your Wallet: Unused cloud resources can linger and silently accrue costs. Regularly review your resources and remove anything no longer required.
By following these best practices, you can avoid common pitfalls and keep your cloud spending under control.
Additional Suggestions
- Negotiate with your Cloud Provider: Cloud providers are often open to discussing discounts, so don't hesitate to ask for a better price.
- Cloud Cost Optimization Tools: Ditch the manual analysis! Cloud cost optimization tools like Astuto OneLens (check it out here) take away the burden of analyzing Cost and Usage reports and billing data to come up with savings recommendations. By analyzing your cloud billing data, we show you the best possible ways to reduce your cloud costs bills within an hour of connecting your CSP accounts.
- Educate Your Employees: Empower your team by fostering a culture of cloud cost awareness. Train employees on how to use cloud resources efficiently to optimize costs across the organization.
By implementing these strategies, you can ensure you're getting the most out of your investments while keeping your cloud spending in check.
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