Unjustified Cloud Costs

Medium will record financial profits for the first time in its history, and the most prominent step that enabled it to achieve this achievement was reviewing cloud services expenses and reducing them by half a million dollars per month.

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The popular Medium platform attracted a new CEO two years ago, and one of his tasks at the time was to make it a profitable company after years of successive losses. As usual, he began reviewing and controlling expenses and getting rid of unnecessary items, and he noticed that cloud services constitute an essential part of the company’s budget. He directed employees to review monthly expenses related to cloud services. What they found was that many cloud services resources were not being used, and the platform was paying huge amounts of money per month for unused resources. No one was reviewing the efficiency of exploitation periodically, and hundreds of thousands of dollars were paid without sufficient auditing. They were able to save half a million dollars per month just by reviewing the extent of cloud services exploitation, and they were able to turn the company’s situation around and make profits. Cloud Optimization Concept Cloud service providers such as Amazon and Microsoft have listed Cloud Optimization as one of the main reasons for the decline in sales this year. The reason is that companies started comparing what they pay with what they use, and they realized how much money they were wasting, and they recalculated the quantities, and determined exactly what they needed. Therefore, sales declined after users became aware. Basic costs: For example, in the case of IaaS cloud services, the costs are generally distributed over three basic items: Computing, Bandwidth, and Storage.

1️Hidden costs: – Unused resources: Renting or reserving additional resources of memory, storage, and processing without using them.

2️- Miscalculating quantities: When there are not enough resources due to poor preparation, the company will pay more to compensate for the defect.

3️- Mismanagement: Reserving virtual machines, and forgetting to turn them off or disconnect them if they are not used. The meter continues to record costs even though they do not exist.

4️- Additional services such as Load Balancers or VPN.

5️- Costs of exiting the service: If the company decides to terminate its dealings with a cloud service provider, the provider will impose additional fines for retrieving the data it has and terminating the services.

6️- Support costs: Following up on technical problems may become complicated and entail other costs.

7️- Human costs: Usually, the salaries of cloud service specialists are higher than their peers, and this of course depends on the market, and each market has its own equation.

8️- Availability costs: Using two or more geographical locations of the cloud service provider has its high price.

At some point and for each company, there is a point of equivalence between the costs of cloud services and the costs of private servers. After this point, cloud services may become economically unfeasible; because the cost of managing private servers will be lower. In general, reducing costs should not be the main motivation behind moving to cloud services. It is recommended to periodically monitor the costs of cloud services and the extent of utilization of rented resources, taking into account the size of the company and its services, and each case separately. This is closely related to the value delivered behind the various investments. In the case of the Medium platform, its financial situation changed completely after applying this control well.

Reference

Hussam Khattab, (2024, May 18), Linkedin