Can the cloud really save your business money?


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Technology experts tend to fixate on the latest, greatest thing—and nowhere has that been more evident than in the cloud. Although cloud services have often been presented as a magic pill to curtail IT spending and increase efficiency, the cost of barely used silos and unnecessary capacity can make the cloud a bitter pill to swallow.

But how can that be when we’ve been told for years that cost savings were one of the chief benefits of cloud migration? It’s true that cloud storage and other cloud-based solutions allow businesses to avoid the expense of routine maintenance, upgrades and new equipment, but pricing for cloud instances is complex and subject to variation depending on CPU core, cloud storage units, RAM size and data transfers, to name just a few. The cloud only becomes cost-effective when you use these vectors efficiently, carefully evaluating your workload size and selecting the most affordable platform for your needs.

Choosing the correct provider adds even more complexity, as certain platforms may be more affordable than others. Fortunately, it is still possible for many SMBs to reap the savings lauded by cloud advocates—the trick is to choose carefully in order to get the biggest bang for your buck. Here are a few techniques that will allow you to capitalize on cloud efficiency while also saving money.

Root out unnecessary capacity

One area where businesses can quickly rack up costs is unnecessary capacity. According to one report, cloud servers are vastly underutilized, with about 20% to 30% of allocated servers in a typical data center not being used at all and many others only used about 5% of the time. The latter, known as “zombie servers,” cost businesses a collective $62 billion in unused cloud storage per year, according to Business Insider.

The solution to all this unnecessary spending is to closely evaluate your actual server capacity and usage. Work with your IT solutions provider to establish processes for monitoring capacity, along with CPU, memory, disk and network utilization. The resulting reports will help you make sense of the size of your workload and any potential to save. Managed services providers (MSPs) can typically automate this type of reporting to help you understand what resources you’re using over time.

Eliminate under-used cloud services

Forking over a few dollars a month for an online tool doesn’t seem like much, but as time goes by, the cost of these cloud applications will climb—even if you no longer need their services.

It’s surprisingly easy for this sort of frivolous spending to happen. After all, cloud-based apps are easy to download and set up, and many offer free trial periods before incurring fees. The problem is that businesses tend to only use them once or twice before abandoning them. Whether the user decides an app doesn’t do what they hoped or simply only needed to use it once, the bottom line is that your business ends up being charged monthly for a tool it’s not using. To eliminate this kind of waste, regularly audit the cloud services in your portfolio to find any that need to be retired.


Consider other cost-saving measures

There are other ways to cut costs associated with the cloud, including some that may not be so obvious. For instance, in response to the fact that many businesses find they only really need their cloud providers during peak business hours, certain providers offer scheduling tools that allow off-hours instance automation and may result in modest monthly savings.

What’s more, Amazon Web Services (AWS) offers two alternative billing models known as reserved instances and spot instances. With reserved instances, you pay a significantly lower hourly rate than you would with on-demand pricing, and you agree to pay for all hours over a one- or three-year term in exchange. If you plan on using these instances heavily throughout the life of your agreement, the reserved instances model can offer discounts of 31% to 60% above on-demand pricing, while spot instances provide access to spare capacity at a heavily discounted rate. You’ll get a notification when AWS needs the resources back, and you can access cheap server space for testing and big data cloud storage in the meantime.

Keep in mind that certain cloud services providers may be a better fit for some workloads than others, and many businesses find it most cost-effective to distribute different workloads across several cloud providers and services. If you’re budgeting more than $1,000 a month for cloud services, it may be wise to re-evaluate your provider using a free cloud comparison tool like Cloudorado and CloudSquare that will analyze your server and hosting expenses. Alternatively, an IT solutions provider—such as your MSP—may offer this kind of consulting service itself.

If you’re relying on an MSP for setup and support, one last way to save on cloud instances and services is to reduce the support level of your contract. Many cloud services and applications tack on heavy monthly charges for support packages, but these may be unnecessary if you already have access to support features through your IT solutions provider.

In this day and age, the efficiency, mobility and potential of cloud services makes the tools largely unavoidable, especially for businesses that engage in remote work, have multiple locations, use big-data analytics or require on-demand online testing and development. But if you want the cloud to actually save your company money, it’s imperative to choose your tools and pricing plans with the strictest business sense, making sure to avoid unnecessary costs and get the most out of your capacity. After all, innovation shouldn’t have to be cost-prohibitive! For more on keeping costs down, check out our free e-book, The Basics of IT Budgeting.

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