In times when businesses increasingly rely on cloud infrastructure to power their operations, managing cloud costs has become a critical concern. As organizations scale their usage of cloud services, the complexity of managing expenses and optimizing resource allocation grows exponentially. 

In response to this challenge, many cloud cost management software solutions have emerged, promising to help businesses gain visibility into their cloud spending and control costs effectively. 

However, selecting the right cloud cost management software can be daunting with the abundance of options available. This article aims to demystify the process by outlining key considerations and criteria to guide businesses in choosing the most suitable cloud cost management solution for their needs.

Navigating successfully through the cloud environment means ensuring a perfect balance between performance and cost-effectiveness. You can achieve this by incorporating cloud cost management software in your cloud infrastructure. With cloud cost management software, you gain the following benefits:

• Cost Transparency: It will provide you with up-to-the-minute information on expenditure in the cloud, thoroughly comprehending resource utilization and its corresponding costs.
• Maximizing Efficiency: Cloud cost management software will help you recognize and use cost-saving possibilities by scrutinizing usage patterns and eradicating inefficiencies in resource distribution.
• Budgeting and Predictions: It will help you execute proficient budgeting tactics and project future expenses using past data, enabling proactive financial planning.
• Adaptability: With cloud cost management software, you can easily accommodate shifts in resource consumption and adjust to new cloud services, ensuring seamless scaling as your organization grows.

However, making your way through the vast selection of cloud cost management software available in the market can seem overwhelming. Numerous software are at your disposal, making it challenging to choose the most suitable solution to help you establish an efficient, cost-effective infrastructure. This is why a step-by-step approach to selecting cloud cost management software becomes crucial. With a carefully crafted strategy backing your search, you can confidently explore and choose from our curated list of comprehensive cloud cost management and multi-cloud cost management tools. This will streamline your decision-making process, ensuring your chosen software seamlessly aligns with your organization's requirements.

Let's begin!

How To Choose The Right Cloud Cost Management Software?

Defining your objective will help you align the features and capabilities of the software with the specific needs and priorities of your organization. Since you will invest significantly in purchasing and installing cloud cost management software, you must clearly understand your objectives. 

When optimizing cloud costs, you should look for cloud cost management software focusing on features like identifying cost inefficiencies, eliminating unused resources, and offering granular insights on cost-saving opportunities.

Defining the objective helps in the following ways:

• It enables a focused search for a solution catering to the challenges of managing and reducing cloud expenses. 
• It ensures that the chosen cloud cost management software aligns with the organization's goals, enhancing financial governance and effective cloud cost management.

One you define your objectives, the following steps will help you narrow your search for the right cloud cost management software for your business.

1. Assess Your Cloud Environment

Evaluating your cloud environment is crucial in determining your organization's ideal cloud cost management software, as it offers essential insights into your current infrastructure. This assessment enables you to select a solution that caters to your unique requirements. 

Failing to thoroughly understand your cloud setup may lead to choosing software without seamless integration or the ability to monitor your resource usage effectively.

You can opt for either native cloud cost management software or third-party cloud cost management software. Let's look at the difference between the two to ease your confusion.

Native Cloud Cost Management Software

Native software is purposefully developed to control expenditures efficiently within a designated cloud environment. This software enables users to make well-informed decisions about their cloud expenses by offering extensive insights and data.

Some features of native cloud cost management software:

• Integration: Native software is seamlessly integrated with major public cloud service providers, allowing for centralized management of cloud costs and usage.
• Cost tracking and allocation: Native software provides meticulous cost-tracking features, enabling real-time monitoring of cloud resource expenses. You can quickly analyze your spending on various services and identify areas for cost optimization.
• Cost allocation: This software also facilitates allocating cloud resource costs to different departments or teams. This enhances your understanding of resource utilization and helps determine the individuals or teams responsible for the associated expenses.
• Recommendations: Native software offers intelligent recommendations based on industry best practices and usage patterns. Following these suggestions can reduce your cloud costs without compromising performance or functionality.

Third-Party Cloud Cost Management Software

The third-party software offers extensive and adaptable solutions to handle cloud costs effectively. These software are designed to support multiple cloud service providers with their advanced analytics abilities, leading to a comprehensive cloud cost management approach.

Some features of third-party cloud cost management software:

• Multi-Cloud Service Provider Support: This is the critical differentiator between native and third-party cloud service providers. The ability to support cloud costs for multiple cloud service providers allow you to manage cloud costs and usage effectively across all cloud accounts from a centralized location.
• Customizable dashboard functionality: This software provides customizable dashboards, enabling you to visualize and analyze your cloud spending and usage data quickly according to the specific needs of your business.
• Advanced analytics capabilities: These software offer advanced analytics functionalities to assist you in analyzing and optimizing cloud usage patterns. With the ability to identify trends and predict future costs, you can make informed decisions regarding your cloud spending.

Suppose your organization operates within a multi-cloud environment, using services from both AWS and Azure. In this situation, assessing your cloud environment becomes paramount when choosing a cloud cost management software that can efficiently handle costs across multiple providers.

In such a situation, searching for the following characteristics is advisable:

• Multi-Cloud Compatibility: The assessment reveals that your organization employs multiple cloud service providers. Consequently, your priority is to find a cloud cost management software that supports and seamlessly integrates with AWS, Azure, and potentially other providers within your ecosystem.
• Integration with Existing Software: The assessment also entails identifying any existing software or systems your organization utilizes for monitoring, automation, or financial management. This information is vital to ensure that the selected cloud cost management software can smoothly integrate with this software, eliminating any workflow disruptions.

Implementing a third-party cloud cost management system would be wise for this example.

2. Check Features & Functionalities for Requirements

Defining feature requirements for cloud cost management software is vital in ensuring alignment with your organization's goals. These requirements, tailored to your specific needs, streamline the selection process, helping you choose software that effectively addresses your unique challenges and priorities.

The reasons below highlight the significance of focusing on feature requirements when looking for cloud cost management software.

• Alignment with Objectives: To ensure that the cloud cost management software supports your organization's overarching objectives, feature requirements connect your goals and the software's capabilities. By specifying features that directly align with your objectives, such as cost optimization, budget control, and resource efficiency, you can guarantee that the selected software aligns with your aims.

• Customization for Specific Needs: Managing cloud costs is a task that varies for each organization, as they have different requirements. With feature requirements, you can personalize your search based on specific functionalities essential for your business. 

For instance, if you prioritize granular cost allocation, you can narrow your focus to software that excels in this area, like CloudZero, Yotascale, etc. You can read about these and more such tools in our AWS cost optimization tools blog.

Talking about feature requirements, let us look at some of the most important features you should look for when searching for cloud cost management software for your organization.

Look For Integration Capabilities

The seamless integration of cloud cost management software is a vital consideration when choosing a solution, as it significantly impacts workflow efficiency, data accuracy, and the overall success of implementing the software within your organization. 

Opting for a seamlessly integrated solution dramatically enhances the effectiveness of cost management and financial governance processes.

The following reasons make ease of integration significant in cloud cost management software selection:

• Workflow Continuity: Seamless integration ensures that the cloud cost management software effortlessly incorporates into your existing systems, preventing disruptions in your workflow. This level of continuity is vital for upholding productivity and minimizing unnecessary downtime.
• Efficiency and Time Savings: By offering easy integration, the software reduces the time and effort required for implementation. This efficiency is especially valuable for organizations that seek to swiftly deploy and leverage cloud cost management software without long setup periods.
• Utilization of Existing Tools: The simplicity of integration enables you to make the most of your organization's current tools, such as financial management or reporting systems. This integration optimizes the effectiveness of your existing technology stack, eliminating the need for a complete system overhaul.

Look For Cost Transparency And Analytics

Incorporating functions related to cost transparency and analytics in your software selection is imperative for several reasons:

• Enhanced Visibility of Expenditures
  Understanding Expenses: Cost transparency provides a comprehensive overview of the allocation of your cloud expenses, enabling you to grasp the breakdown of costs across various services, applications, or departments.
  Identification of Patterns: Analytics assist in identifying spending trends and patterns, empowering you to make well-informed decisions regarding resource allocation and optimization.

• Opportunities for Optimization
  Cost Analysis: With the assistance of analytics software, you can conduct a thorough cost analysis, facilitating the identification of areas where costs can be optimized, or resources can be utilized more effectively.
  Evaluation of Performance: By analyzing data, you can evaluate the performance of different resources, helping you make informed decisions regarding scaling, rightsizing, or selecting more cost-efficient alternatives.

• Budget Planning and Forecasting
  Precise Budgeting: Cost transparency facilitates precise budgeting by thoroughly understanding previous expenditures and projecting future expenses based on usage trends.
  Projection: Utilizing analytics software, forecasting future costs becomes efficient, empowering proactive budget modifications and averting unforeseen financial excess.

Some software that can help with real-time cost analysis are Azure Cost Management+Billing and Virtana Optimize. You can read about these and more such software in our Azure cost optimization tools blog.

Check Reporting Features

Reporting features play a vital role in ensuring the efficiency of cloud cost management software. These features offer essential visibility and analysis capabilities that optimize expenditure, strengthen financial governance, and facilitate strategic decision-making in the ever-evolving cloud computing environment. Let us look at how cloud management software with built-in reporting features can prove helpful:

• Financial Transparency: Reporting features offer comprehensive insights into your cloud spending, clearly understanding where your funds are allocated. This level of transparency is crucial for improving financial planning and decision-making.
• Cost Allocation and Accountability: The reporting functionalities provide precise cost allocation, allowing you to assign expenses to specific departments, projects, or teams. This detailed breakdown enhances accountability and transparency within your organization, ensuring responsible resource management.
• Budget Management: Reporting features are critical in effective budget management. They enable you to track expenditures against budgets, monitor deviations, and adjust your financial plans. This capability is instrumental in preventing cost overruns and ensuring adherence to your financial targets.

Check For Monitoring Abilities

The inclusion of monitoring abilities is of utmost significance when it comes to choosing a cloud cost management platform. These monitoring abilities offer instantaneous visibility into your cloud infrastructure, enabling effective tracking of resource consumption, identification of cost trends, and facilitation of informed decision-making. Software with robust monitoring capabilities will help with the following.

• Real-Time Insights: By utilizing monitoring capabilities, you gain immediate visibility into your cloud environment and receive real-time insights on resource utilization and associated costs. This empowers you to promptly address any anomalies or unexpected spikes in usage. Many software, such as CloudAdmin and Kubecost, offer insight into cost data. 
• Proactive Issue Identification: Continuous monitoring is vital in proactively identifying potential cost efficiency issues. Whether it involves inefficient resource allocation or sudden usage increases, monitoring lets you detect problems before they result in substantial cost overruns.
• Resource Optimization: Effective monitoring allows you to pinpoint underutilized or idle resources. This valuable insight aids in making well-informed decisions about rightsizing or decommissioning resources and optimizing your cloud infrastructure for optimal performance and cost-effectiveness.
• Budget Compliance: Monitoring expenses in real-time makes tracking spending vis-à-vis the allocated budget possible. This effectively ensures strict adherence to financial limitations while enabling timely corrective measures to be taken if spending approaches or surpasses predefined limits.
• Enhanced Forecast Precision: Monitoring software provides historical information and usage trends, thus enhancing cost forecasting accuracy. The ability to predict future expenses is crucial for proactive financial planning and allocation of resources.

Look For Automation Capabilities

Investing in cloud cost management software that incorporates automation features enables organizations to effectively manage cloud expenditure, optimize resource utilization, enhance operational efficiency, and ensure adherence to policies and standards.

When searching for cloud cost management software, look for automation capabilities.

Automated Cost Tracking

Find a software solution that effortlessly monitors and gathers cloud usage and expenditure information. This automated process guarantees the availability of precise and timely data for comprehensive cost analysis. Here are a few significant benefits:

• Real-time Visibility: With automation, you can gain immediate insights into your cloud expenses, ensuring real-time visibility to monitor costs as they accumulate promptly. This technology also allows you to identify any anomalies or unexpected spikes promptly.
• Accuracy and Precision: Automated systems mitigate the risk of manual tracking and reporting expenses by eliminating human error. This ensures the accuracy of your cost data, providing reliable information for financial analysis.
  Moreover, automation enables the precise allocation of costs to specific projects, departments, or resources. This prevents any inaccuracies in financial reporting, ensuring that your cost allocations align with the actual usage and distribution of resources.
• Optimized Resource Allocation: Automated tracking facilitates analysis of usage patterns and trends, offering valuable insights to help organizations make data-driven decisions. By relying on this analysis, you can optimize resource allocation and scale infrastructure according to demand, enhancing overall efficiency.
• Forecasting and Planning: Automated cost-tracking systems often incorporate predictive analytics, assisting organizations in forecasting future costs by analyzing historical data and usage patterns. This valuable software will help you make informed decisions regarding future resource allocation.
• Budget Planning: With access to accurate and timely cost data, you can effectively plan budgets and make knowledgeable choices regarding the allocation of resources.

Automated Idle Resource Identification

Organizations aiming to optimize costs, improve resource efficiency, maintain budget control, and ensure their cloud infrastructure's general health and effectiveness must prioritize identifying and resolving idle resources in the cloud.

While you can use monitoring software to identify idle/unused resources, it can quickly become tiresome for the following reasons:

• Limited Perspective: Monitoring software might lack a comprehensive perspective of the entire system, as they may prioritize performance metrics while disregarding specific resources' actual utilization and relevance.
• Inefficient Resource Management: Relying exclusively on monitoring software can lead to delays and ineffectiveness in managing resources.
• High cost of deployment: Using monitoring software can add up to the overall deployment cost. Moreover, ongoing maintenance, updates, and monitoring software support are additional factors influencing the overall deployment expenses.

This is where an automated agentless audit tool like Lucidity Storage Audit can help.

It is a storage audit solution with an easy-to-use, executable process that offers the following insights:

Cost Optimization Insights: This analysis is geared towards boosting overall cost-effectiveness, pinpointing significant opportunities for reducing storage expenses.

Efficiency Assessment: Uncover and address inefficiencies from idle/unused resources or overprovisioning and streamlining your storage environment for optimal cost-effectiveness.

Proactive Bottleneck Detection: It proactively identifies potential performance bottlenecks, preventing downtime that could impact your finances and reputation.

Once the idle or unused resources are identified, you can delete or rightsize them.

Resource Scaling Automation

Multiple types of resources, such as compute, storage, network, database, and so on, lead to high cloud bills. The ability of these resources to scale up and down as per the changing requirements can make a massive difference to the overall cloud bill since your cloud service provider will charge you based on the resources provisioned. This is why you should look for software that offers automated scaling solutions. 

Compute resources are one of the significant contributors to the cloud bill and, hence, could use auto-scaling to bring down the cost associated with it. Numerous software, both native and third-party, provide robust solutions for compute resource auto-scaling, with AWS Auto Scaling being a prominent example in the auto-scaling best practices. 

However, it's essential to emphasize that the significance of storage resources should not be overlooked. Given the substantial impact of storage resource usage on the overall cloud bill, careful consideration and optimization of storage resources are imperative for a holistic and cost-effective cloud management strategy.

Why?

A study done by Virtana, "State of Hybrid Cloud Storage in 2023", on over 350 cloud decision makers revealed that 94% of respondents said their storage cost was increasing. Additionally, 54% were concerned that storage costs were growing faster than the overall cloud bill.

To further understand the impact of storage on overall cloud cost, we did an independent study on over 100 enterprise clients leveraging cloud service providers like AWS, GCP, or Azure and found out that:

• Block storage makes up a significant portion of the overall cloud bill.
• The average disk utilization is low.
• Despite significant overprovisioning, the companies face at least one downtime per quarter.

We investigated further and found that improving the buffer so that the system remains responsive and performs optimally during periods of increased or unpredictable demand requires the following:

• Three manual touchpoints include deploying,  monitoring, and alerting. This would demand the DevOps team to manually navigate through 3 different tools to manage 1000s of instances running in an enterprise cloud infrastructure.
• A minimum downtime of 4 hours is needed to shrink 1 TB of disk space for certain cloud providers, and a 3-hour downtime is required when the disk has to be upgraded.
• Wait time for at least 6 hours for the next scaling process.

Despite these challenges, organizations prefer overprovisioning storage resources over-optimizing storage. It is an understandable compromise because:

• Due to the limitations of the CSPs, building a custom tool becomes necessary. However, it is an arduous process demanding higher DevOps efforts and time investment.
• Relying solely on CSP tools may lead to inefficient and resource-intensive processes, making continuous storage optimization impractical for day-to-day operations.
• Leading cloud service providers like AWS, Azure, or GCP have no live shrinkage process. Although there is a manual shrinkage process, it involves significant manual intervention, which leaves room for errors, misconfiguration, and downtime. Moreover, since the manual process demands stopping the instance, taking snapshots, and mounting new volume, the process leads to downtime.

The mentioned difficulties negatively impact the regular functioning of organizations, forcing them to allocate excessive resources. However, this leads to substantial expenses and operational consequences, representing inefficiency in resource utilization as organizations have to pay for unused resources.

This is why there is an urgent need for an automated scaling process, such as that offered by Lucidity's Block Storage Auto-Scaler.

Lucidity Block Storage Auto-Scaler is the industry's first autonomous storage orchestration solution that automates the expansion and shrinkage of storage resources according to fluctuating requirements. 

Lucidity Block Storage Auto-Scaler gets onboard with just three clicks and optimizes the application's configuration with a 70-80% utilization rate for maximized efficiency. This automated shrinkage and expansion of storage resources ensures storage availability and strengthens the system's resilience and responsiveness.

Benefits Of Lucidity Block Storage Auto-Scaler

With Lucidity Block Storage Auto-Scaler, you get the following benefits:

• Automated expansion and shrinkage of the storage resources: Lucidity utilizes state-of-the-art automation to dynamically scale resources, guaranteeing constant storage availability by seamlessly adapting to changes in demand.
• Storage cost savings up to 70%: Lucidity's automated scaling capability enhances operational efficiency and leads to significant cost reductions, enabling users to trim storage expenses by an impressive 70%. The Auto-Scaler maximizes disk usage by boosting it from 35% to 80%.
  With an ROI calculator, Lucidity also helps you calculate how much you will save on storage costs once the Auto-Scaler is installed. You can access an extensive analysis showcasing possible reductions in storage expenses by entering information like disk expenditure, disk growth rate, and utilization into Lucidity's system.
• Zero downtime: Lucidity Block Storage Auto-Scaler maintains optimal performance during unexpected demand spikes or reduced activity by dynamically adjusting storage resources.
  Unlike manual shrinkage, which leads to configuration downtime, Lucidity's Auto-Scaler effortlessly expands and shrinks resources without causing any disruptions. This intelligent and automated solution ensures uninterrupted operations, allowing seamless adjustments in response to changing workloads.
• Customized policy: Auto-Scaler's " Create Policy" ensures a smooth system customization process that ensures maximum performance. You can easily create personalized protocols through this feature by specifying important details, including policy name, desired utilization, maximum disk size, and buffer size.

Once the policy is established, Lucidity will strictly follow these policies and deliver efficient instance management that perfectly matches the specified requirements. The extensive customization options greatly enhance performance and cost-effectiveness, providing a reliable and tailored storage solution.

Other automated features that you should look for in cloud cost management software are:

• Rightsizing Recommendations: The software should offer automated suggestions on rightsizing instances and resources. These recommendations enable the alignment of the capacity of resources with the current workload and optimize expenses while maintaining optimal performance.

• Scheduled Shutdowns And Startups: Confirm if the software has incorporated automation features to schedule the shutdown and startup of non-essential resources during designated periods. This can result in substantial cost reductions, particularly in non-production environments.

• Automated Alerts And Notifications: Ensure the cloud cost management software has automated alerts that notify the team when the cost exceeds the set budget limit. This helps in proactive cost management.

• Policy-based Automation: Check whether the software allows predefined regulations to enable automation within a system. For instance, policies can be established to guarantee accurate cost distribution through properly labeling resources.

• Cost Forecasting Automation: Find software that utilizes historical data and trends to automate the process of cost forecasting. Using automated forecasting can aid in proactive budgeting and planning for upcoming expenses.

Inspect Security And Access Control

Security and access control features are vital in cloud cost management software to protect sensitive data, comply with regulations, deter unauthorized access, and uphold the security and integrity of an organization's cloud cost management processes.

Look for the following security and access control features when choosing a cloud cost management software:

• Data Encryption: Ensure that the chosen software provides robust encryption for data during communication (in transit) and when stored (at rest). Look for established protocols like SSL/TLS for data in transit and AES encryption for data at rest. 

• Customer Data Access Restrictions: Verify that the tool enforces strict access controls over customer data and other sensitive information. It is vital that users only have access to data that is relevant to their specific roles and responsibilities. 

• No Inbound Ports Requirement: A reliable cloud cost management software should not necessitate the unnecessary opening of inbound ports. Minimizing open ports decreases the potential attack surface and significantly enhances security measures. 

• Secure APIs: If the software interacts with other systems or cloud services, it is crucial to ensure that it utilizes secure APIs (Application Programming Interfaces) and follows industry best practices for API security. 

• Audit Logging: Look for comprehensive audit logging capabilities within the software that diligently capture and log user activities, configuration changes, and any attempted unauthorized access. These logs provide valuable insights for security analysis and monitoring.

3. Check Cost-Related Aspects

When choosing software for managing cloud costs, it is essential to consider various expense-related factors to ensure efficient resource utilization and financial optimization. Below are the aspects you need to examine:

• Pricing Model: Gain a clear understanding of the pricing structure adopted by the cloud cost management software. Some solutions follow a subscription-based model, while others charge based on the amount of data processed or the number of cloud resources managed.
• Total Cost of Ownership (TCO) Analysis: Evaluate the overall cost of ownership, considering the software license fees and any additional expenses such as implementation, training, and ongoing support.
• Contract Terms And Flexibility: Review the terms outlined in the software license agreement. Assess the level of flexibility in the contract terms and the ability to adjust licensing arrangements to accommodate changing organizational requirements.
• Hidden Fees: Thoroughly analyze the vendor's pricing documentation to uncover any hidden fees or additional charges that may not be immediately obvious. Pay special attention to any costs associated with specific features or usage thresholds, as they may not be clearly stated upfront.
• Support Costs: Carefully assess the associated costs for customer support, training, and ongoing assistance. It is essential to understand if the vendor offers different support tiers with varying costs and service levels, as this can significantly impact the overall expenses incurred for obtaining support.

Find The Right Cloud Cost Management Software!

By adhering to a systematic procedure, as explained in this guide, you can equip yourself with the ability to make well-informed choices while selecting an appropriate cloud cost management software. From evaluating current requirements and goals to assessing prospective solutions and considering scalability, each step is important in discovering software that aligns with immediate objectives and long-term strategies. It is crucial to remember that the right cloud cost management software not only optimizes expenditure but also enhances overall efficiency, performance and ultimately contributes to the success of cloud-based initiatives.

If you find yourself struggling to optimize your storage resources and paying hefty cloud bills, we suggest getting a storage audit done to understand how much of your application is grappling with idle/ unused resources. Once that is done, we will automate storage resource provisioning to ensure you always have the right storage availability and never have to pay for the resource you are not using.

What are you waiting for?

Reach out to Lucidity for a demo.