While world organizations want to make ESG part of their goals, there are limited tactics for enterprises to keep it balanced with digital growth. Learn where cloud cost optimization can help.
Last Updated on : October 10, 2023
With consistent digital growth, it is often difficult to keep a balance with ESG goals. Cloud cost optimization can be the key to sustaining this balance and creating a flourishing business.
- Sean Song (CFO, Mobvista)
In our ever-evolving digital era, companies are continually challenged to balance technological advancements, financial sustainability, and responsible corporate stewardship. As a significant part of this juggling act, cloud computing has emerged as a central component of modern business infrastructures. However, like any powerful tool, the cloud must be wielded with an eye toward efficiency and responsibility, particularly for organizations striving to meet ambitious Environmental, Social, and Governance (ESG) goals.
Harnessing the power of the cloud does not merely involve transferring operations from on-premise to a digital sphere. It necessitates a thoughtful strategy that optimizes costs, ensures scalability, and reinforces the principles of sustainability. This is where cloud cost optimization enters the stage, a crucial strategy that can significantly trim the financial fat from cloud operations.
Cloud cost optimization involves the diligent alignment of your cloud resource consumption with actual demand, avoiding overprovisioning, reducing waste, and consequently lowering the carbon footprint of data center activities. By dovetailing cloud cost optimization with an effective ESG strategy, organizations can unlock a new dimension of sustainable growth, financial stability, and corporate responsibility.
When companies first used the cloud, it was more of a tool to house data backups and provide other data “cold” storage. But the increased digitization of corporations and their products and services has forced companies to utilize it for more service delivery to clients and partners.
Consider mobile gaming. While some have “offline” settings, they increasingly require a data connection to challenge opponents, view ads that power the free-to-play settings, and access necessary updates. As such, app developers will use cloud services to deliver an uninterrupted user experience.
Today’s organizations use cloud computing for most of their service delivery and to power their internal processes, regardless of what industry in which they operate. This fact alone calls for stringent cloud cost management policies.
The ability to query any information from anywhere worldwide means computers must constantly run in preparation for data calls. As such, cloud infrastructure needs significant electricity to power and cool the numerous servers, storage systems, and networking equipment they house. The data centers that power cloud computing traditionally operate 24/7, leading to continuous energy consumption
It is even when some of the resources are running idle or can be moderated to create a more energy-efficient cloud architecture. This, thereby, goes against sustainability and puts weight in the pocket of companies. To respond effective cloud cost optimization strategies can be adopted for overall cloud optimization.
The leaders of the world understand this problem. There are organizations and cloud consulting companies that are experimenting with different cloud optimization techniques. Techniques that give control for cloud cost management, and affect the electricity consumption & carbon footprint of the company.
Accenture research found that migrating physical data centers to the public cloud can reduce power consumption by 65% and carbon emissions by 84%. When a cloud environment is optimized, it enhances the system's availability and elasticity, directly contributing to better energy efficiency. This efficiency is realized as optimized systems ensure that no computational resources are wasted, reducing the overall power consumption.
Optimization solutions intelligently utilize idle resources in public clouds, maintaining service reliability while enhancing the utilization rate of the cloud server infrastructure. This improved utilization not only reduces unnecessary indirect power consumption, helping organizations reduce their environmental impact, but it also leads to significant cost savings.
The improved efficiency and reduction in power consumption brought about by cloud optimization align well with the environmental sustainability goals of many organizations today. This makes cloud optimization not just a matter of cost savings but also a step towards more sustainable and responsible business practices. So, the importance of cloud optimization goes beyond cost and performance—it's also about creating a cloud strategy that's in line with an organization's broader commitment to sustainability and environmental responsibility.
1. Using Cloud-native Architectures
Companies need to use cloud-native architecture, which refers to creating software and solutions engineered to take full advantage of the cloud and maximize resiliency and availability. Spot Instances, for example, are a type of computing capacity offered by cloud service providers which allow users to bid on and use their unused capacity at significantly reduced costs.
They are ideal for flexible, interruptible workloads as they can be outbid and interrupted when the demand for capacity increases. Spot Instances are an ideal solution for data processing and testing environments, allowing for more significant computing capacity at a lower cost. This leads to faster processing times, higher throughput, and cost-effective scalability.
Not only does this optimized usage of cloud resources result in substantial cost savings, but it also promotes environmental sustainability. By reducing the demand on energy-intensive data centers during peak times and harnessing unused capacity, Spot Instances contribute to efficient energy use and a reduced carbon footprint, aligning with the environmental goals of ESG strategies.
2. The Importance of Optimization
An optimized cloud improves the availability and elasticity of the system, therefore, improving energy efficiency. Optimization solutions utilize idle computing resources in public clouds while ensuring service reliability, improving cloud server infrastructure utilization rate, and reducing unnecessary indirect power consumption. A positive byproduct is substantial cost savings in cloud resources such as computing, storage, and network that overall improves the efficiency of cloud use.
3. Flexibility Over Peak Traffic Design
Virtually every company’s products and solutions encounter peak times where data usage is several magnitudes more than normal traffic times. People play mobile video games and listen to podcasts during their commutes, but then less frequently during the workday. Companies that employ a private data center need to configure it to handle maximum traffic loads all of the time (lest the servers crash). By doing so, the cloud runs over capacity during latent times, increasing costs and environmental impact. Private clouds can provide companies with the data availability needed at any given time.
4. Server Virtualization Usage
Public clouds often use virtualized servers, commonly used for converting a physical server into several virtual machines. As a result, data centers use fewer servers, which minimizes electricity consumption and waste heat. These are increasingly used in public cloud environments, which are investments that companies may not make for their own private data centers.
As long as companies provide digital services, there is no avoiding the need for energy-using data applications. And yet, all that data consumption does not have to have an unnecessarily costly environmental impact. However, by embracing the public cloud combined with the right optimization solutions, companies can provide data-rich services to employees and clients wherever they are while progressing on their incredibly important ESG goals.
Cloud computing costs are a varying quantity that changes with the number of factors in play while hiring and the project complexity such as:
There are several cloud cost management tools that are out there. Some of the most important names on the list are:
There are several cloud optimization software that are developed for the niche. These are:
These are some of the cloud cost optimization best practices:
Cloud spend optimization is a process using which an organization minimizes its spending on the cloud while making sure that its performance and scalability aren’t impacted.
Some of the different ways for cloud cost reduction are:
CFO, Mobvista
Sean is the Mobvista Group CFO, managing the Group's financials and investments. As a member of CICPA, Sean has participated in all three rounds of open investments and financing and co-led Mobvista's listing on the HKEX.
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