24 November 2022 | 5 min read | Agnė Srėbaliūtė
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Cloud Spending: How To Reduce Expenses on a Budget

Although global cloud spending is increasing, companies are looking for ways to cut down the costs. Discover why IP leasing is a solution worth exploring.

Scissors cutting a dollar bill next to a cloud.

Successful adoption of cloud services is crucial for companies ready to drive digital transformation projects. Undeniably, the adoption of cloud is particularly vital within the IT industry, and the growth of the sector in the past years has been tremendous; despite the objective to reduce cloud spending. 

The global COVID-19 outbreak created massive constraints for organizations operating with on-premises IT systems. As a result, many of these organizations have chosen to migrate to the cloud. However, long-term planning of cloud costs can be complicated. Inevitably, according to recent research by Wanclouds, some IT companies decided either to make no additional cloud spending or reduce the current expenses during the last two quarters of 2022.  

How do these changes affect companies, and what are the means to reduce cloud spending? Keep reading to uncover answers to these important questions. 

Key Takeaways: 

  • The demand for cloud services began skyrocketing during the pandemic due to significant benefits in automation, innovation and agility, and this demand continues to increase. 
  • Companies have started reducing cloud spending by rightsizing environments, removing unused server infrastructure, deleting obsolete snapshots, moving object storage and eliminating zombie assets. 
  • The global IPv4 shortage raises IPv4 buying; therefore, companies that are trying to reduce cloud spending are opting to lease IP addresses instead. 

Cloud services: Increasing demand and rising costs 

Although cloud spending is expected to shrink due to the ongoing recession and economic uncertainty, it continues to take the largest portion of IT spending overall. In fact, Gartner estimates that by the end of 2024, cloud spending will take up 45% of IT budgets.  

On a more concerning note, it is also estimated that, on average, companies spend 13% more from IT budgets than originally allocated on cloud. Even worse, nearly one-third of cloud spending goes to unnecessary services and instances. How bad is the issue? $800,000 in losses annually. Unsurprisingly, Wanclouds revealed that IT decision-makers are taking action to rein in the costs. 

So, how can companies reduce cloud spending in a world that is increasingly dependent on the cloud? Here are a few practical tips. 

5 ways to reduce cloud spending  

Cloud services can help organizations avoid hardware costs. But that does not necessarily mean they are the most cost-effective. While pay-per-use models are a safe bet, trying to analyze the monthly cloud bill requires the skills of an accountant with an eye for detail. 

One of the most frequent causes of unnecessarily high cloud costs relates to the inability to harmonize the services with the infrastructure. To tackle the cloud spending problem, it is recommended to: 

  • Rightsize the environment 
  • Remove unused virtual server infrastructure  
  • Delete obsolete snapshots 
  • Move object storage 
  • Get rid of zombie assets
Scissors cutting gold coins next to a cloud with a list of ways to cut cloud spending budget.
5 ways to reduce cloud spending

1. Rightsize your environment 

Rightsizing is the cost-cutting measure with the greatest potential for savings. Developers may set up new Infrastructure-as-a-Service (IaaS) or Platform-as-a-Service (PaaS) offerings that are much larger than necessary. This can be done intentionally to gain additional headroom or inadvertently because the performance requirements of the new workload are not known.

Over-provisioning can lead to exponentially higher costs. Without performance monitoring or cloud management tools, it is difficult to know when resources are over- or under-provisioned. 

2. Remove unused virtual server infrastructure 

It is common for cloud accounts to spend thousands of dollars on unallocated virtual server disk infrastructure. Each cloud provider uses a different name for this. For example, Amazon EBS Volumes, Azure Disk Storage or Google Persistent Disk.  

Due to the dynamic nature of cloud computing, it is easy for users to quickly spin up and spin down workloads, but this puts them at substantial risk of having unallocated storage left over. By checking the virtual server’s disk infrastructure for unallocated storage, it is possible to shave thousands of dollars from monthly bills. 

3. Delete obsolete snapshots 

Many organizations use snapshots to create temporary recovery points in preparation for data loss or failure. However, the cost of snapshots can quickly spiral out of control if not closely monitored.  

Single snapshots are not costly, but costs can quickly increase when multiple are deployed. To get the best handle on the snapshots, organizations should monitor their costs and usage per virtual server to ensure they do not get out of hand. 

4. Move object storage to lower-cost tiers 

Each cloud provider offers multiple tiers of object storage at different prices and performance levels. It is best to move data between storage tiers based on usage. 

5. Remove zombie assets  

So-called zombie assets are infrastructure components that are running in a cloud environment but are no longer in use. Zombie assets can also occur when the startup process fails or because errors in the script prevent deprovisioning.  

If zombie assets are in use, cloud providers will charge for them. Therefore, they should be isolated, assessed and shut down immediately when they are no longer needed.  

There is one more solution worth paying attention to – IPv4 leasing. 

IP leasing: An innovative solution that helps minimize cloud expenditure 

IP addresses are a crucial part of cloud services as all enterprise endpoints need to have an IP address. However, since the pool of free IPv4 addresses has been exhausted due to scarcity and the ever-increasing demand, the prices have risen.

Even though cloud providers offer IP resources with their services, from a capital use perspective, leasing is cheaper than buying IPs as it ensures significantly reduced expenses. OpenMetal, a private cloud provider, can attest to that.  

OpenMetal joined the IPXO Marketplace in March 2022 and has been successfully leasing 4,608 IPs. On average, a single IPv4 address costs around $50. That means purchasing 4,608 IPs would cost $230,400. At the average lease price of $0.47 per IPv4 address, the same resources can be leased for just $2,165.76 per month or $25,989 per year.

Cloud hyperscalers can provide IP addresses to rent. However, would you pay $3.60 per IP address? With the option to Bring Your Own IPs (BYOIP), companies do not need to rely on their cloud providers. Instead, they can lease the assets they need from the IPXO Marketplace and then assign them to the chosen infrastructure at a fraction of the cost. To calculate your savings, use our free cost calculator

A person working in front a computer and calculating growth and spending.
How to support company growth while reducing cloud spending

What to expect in the future

From scalability and flexibility to cost-efficiency – the benefits of cloud computing are undeniable and far-fetching. Unsurprisingly, businesses are going ahead with plans to convert their current infrastructure to cloud computing and are open to implementing hybrid models that encompass both on-premises and cloud services. 

Even in an unstable economic environment and with the clear need to save costs, the demand for cloud services has been increasing, and with that, cloud costs will continue to increase as well. As you now know, it is predicted that in a couple of years, cloud services will account for nearly half of IT budgets. 

Although most small and medium-sized businesses are deterred from implementing cloud infrastructure due to the high capital costs, IP leasing can help companies save while scaling their operations. In fact, compared to using hyperscalers’ assets, you can save up to six times IP-associated costs by leasing IPs via the IPXO Marketplace. 

Are you curious to learn how to save money by leasing IPs and use the savings to drive your digital transformation? Book a free demo and discover the benefits of leasing yourself! 

About the author

Agnė Srėbaliūtė

Technical Content Writer

Agnė is a Technical Content Writer at IPXO. For more than 15 years she has been molding her skills in various fields, including PR copywriting, SEO copywriting and creative copywriting. Her lifestyle is based on continuous learning through numerous areas of interest, leisure activities and travelling. Addictions? Hiking and coffee.