Cloud Spending: How To Reduce Expenses on a Budget

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. 

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 a 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 discover key strategies to reduce your cloud expenses. 

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 prices when buying; therefore, companies that are trying to reduce cloud spending are opting to lease IP addresses instead. 
• Leasing IPs from places like IPXO Marketplace and utilizing Bring Your Own IP feature with major cloud infrastructure providers also allows to cut expenses. 

Cloud Services: Increasing Demand and Rising Costs  

Although there is an ongoing recession and economic uncertainty causing anticipated decreases in cloud spending, it still makes up the majority of total IT expenses. In fact, Gartner estimates that by the end of 2024, cloud spending will take up 45% of IT budgets.    

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

A Solution Worth Paying Attention To: IPv4 Leasing 

IP addresses are a crucial part of cloud services as all enterprise endpoints need to have an IP address. However, due to scarcity and the ever-increasing demand, the pool of free IPv4 addresses has been exhausted. Consequently the prices of IPv4 addresses 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 reduced upfront costs, among other benefits. 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, when buying a single IPv4 address, it usually 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.  

Instead of spending a large sum upfront, you can lease the resources for at least eight years for the same amount of money. This also means you can stop leasing whenever the resources become unnecessary, whether that would be after 1 year or 5 years. In contrast, if you owned a subnet, you would need to find ways to monetize it if it became redundant. 

Optimize Your Cloud Strategy with Bring Your Own IP (BYOIP) 

Cloud hyperscalers can also 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 either bring their own assets or lease them from places like IPXO Marketplace, and then assign them to the chosen infrastructure at a fraction of the cost.  

All the major cloud infrastructure providers, like AWS, Microsoft Azure, Google Cloud and IBM, offer BYOIP feature.  

Some companies use cloud service providers who don’t offer to buy/lease IPs from them. However, they still allow you to utilize BYOIP feature. Cloudflare and its clients is a great example of how the two can work because Cloudflare doesn’t offer IPs to the public.

Curious to see how much your expenses would change if you employed BYOIP? Use our free cost calculator.  

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5 Other Ways to Reduce Cloud Spending   

Cloud services offer organizations a way to avoid upfront hardware costs. However, they may not always be the most cost-effective option. 

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

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 infrastructure. Each cloud provider uses a different name for this. For example, AWS (or Amazon) EC2, Azure VM, GCP (or Google) CE.  

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.   

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.  

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! 

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