Realising the cost benefits of the cloud

Contributed by Anoop P B on 23 Apr 2013

A recent survey of 1,300 companies in the US and UK found that the cloud has reduced total IT costs for 88% of the cloud users surveyed ( If you are one of the businesses wanting to save costs or trying to understand how to save costs by getting onto the cloud, read on.

One of the first things to be aware of is that depending on your application, cloud computing can actually cost more! This is more so the case for low traffic, less critical applications that have consistent and predictable usage patterns. Moving to a cloud environment without first analysing the benefits and adopting best practices can make the move less efficient and more painful. Here are some things to bear in mind if you are considering moving to the cloud for costs savings.

Given the very fabric of the cloud, built out of low-cost commodity hardware and with no SLA on individual instances, the premise of the cloud is that applications are architected to withstand individual instance failures and more particularly to take advantage of the cloud. Which means if you have an application that runs off a single dedicated piece of hardware with a 99.99% SLA, you need to re-think your deployment. One option is to use several smaller capacity instances and load balance them. Another good option is to reserve instances for 1-year or 3-year periods and thereby lower the TCO.

Don’t assume that each month is the same. Instead, observe how your application is used and whether certain days or time periods require fewer compute resources. Utilizing the auto-scaling capabilities of the cloud helps you keep costs low when your traffic is low and to scale up quickly and temporarily when traffic bursts. One of the key cost benefits of the cloud’s economy of scale is the ability to scale up and down quickly. If you are on AWS, you can also architect for Spot instances to get very low cost, additional capacity to handle short bursts.

One other best practice is to stop or deactivate resources when they are not in use. For instance, if you have a test environment that is idle most weekends, turn off the environment or have automated scripts that will bring it up again on Monday mornings. Since cloud providers charge on an hourly basis for instances, make the best of the pricing structure.

If you are an AWS user, the use of some of the additional services provided by AWS can result in much higher reliability at lower costs. For example, use Amazon SES instead of setting up & running your own mail server. Or use ELB instead of a software load balancer and SQS instead of a software queue. While this means compromising on some customization capabilities, you get the availability, elasticity & pay-as-you-go benefits.

The cloud also makes it economically viable to do massively parallel processing where-in one may need large amounts of compute or storage resources for a short period of time. For instance, you could run 50 quad-core 15GB memory instances for 4 hours for less than $150!

Lastly, make sure to measure your costs and cost savings. As the old management adage goes, you can’t manage what you don’t measure. By tagging and monitoring resource costs, you can easily break down costs by department or by purpose. This helps cost allocation, viewing how different projects or departments utilize resources and optimize further.

The oft-repeated case for the cloud that focusses entirely on a shift from capital expenditure to operating expenditure is not only a limited view but also means that you might be missing out on the very things that makes the cloud so exciting & economical.

Neev is an AWS Consulting Partner and has been working with the cloud since the last 5+ years. Neev offers cloud-based software services and infrastructure management services. For more information, check the cloud offerings page or contact us.

Visit us at to know more about our offerings.

Tags: , , ,

Leave a Comment

Security Code: