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Scaling Smart: Best Practices in Cloud Cost Management

March 2025

Summary

Cloud computing has become a critical expense for many organizations, and managing these costs efficiently is imperative. As technology spending surged during the pandemic, the subsequent years have seen a strong focus on cost reduction and cost-efficient growth. With cloud computing being a significant part of technology expenses, organizations are seeking ways to manage these costs effectively. This session brought together top cloud computing experts, including Josh Klahr from Snowflake, Salim Syed from Capital One Software, and Deepak Goyal from AzureLib Academy, to discuss best practices in cloud cost management. The discussion highlighted that the most expensive part of cloud computing is often compute costs, although storage costs can become significant at scale. The session also explored the benefits of cloud computing, such as quick infrastructure availability, which allows businesses to react swiftly to changing needs. However, this also necessitates vigilant monitoring to prevent costs from spiraling out of control. The experts shared insights on how generative AI can both increase costs and offer tools for cost reduction, emphasizing the need for careful implementation and monitoring. Data governance was identified as a key factor in controlling costs by preventing redundant work and ensuring efficient data use. The session also touched on emerging practices like FinOps, which involves cross-functional collaboration to optimize spending. The speakers concluded by discussing the importance of a culture of cost awareness across organizations, encouraging everyone from developers to end-users to be mindful of cloud expenses.

Key Takeaways:

  • Compute costs are a major expense in cloud computing, with storage costs becoming significant at large scales.
  • Benefits of cloud computing include quick infrastructure availability and the ability to rapidly respond to business needs.
  • Generative AI can increase costs but also offers tools for cost management and efficiency.
  • Data governance plays an important role in cost management by preventing redundant work and ensuring efficient data use.
  • FinOps is an emerging practice that encourages collaboration between finance, product, and operations teams to manage cloud costs.

In-Depth Analysis

Most Expensive Parts of Cloud Computing

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ute costs are a significant concern for organizations using cloud services. As Salim pointed out, "Compute is where most companies see the highest cost," because it includes everything from queries to data movement and ETL processes. Storage costs, while initially cheap, become a concern at the petabyte scale, where efficient data storage becomes vital. Josh added that data movement costs, particularly between systems and clouds, can add up, emphasizing the need for a unified architecture to minimize these expenses. Both experts highlighted the importance of monitoring and smart defaults, with Deepak suggesting auto turn-off for unused compute resources to save costs.

Benefits of Cloud Computing

Cloud computing offers significant benefits, including rapid infrastructure availability, allowing businesses to deploy and scale operations swiftly. Salim mentioned, "You can be in production within minutes," highlighting the speed at which businesses can respond to market demands. However, with great power comes great responsibility. The flexibility of cloud resources requires effective governance and monitoring to prevent unchecked costs. Josh emphasized the importance of evaluating the business benefits against the costs, noting that sometimes higher spending is justified by the value derived from quick insights and competitive advantages.

Generative AI's Impact on Cloud Budgets

Generative AI is a double-edged sword in cloud cost management. It provides valuable capabilities but also introduces new cost challenges. Josh noted that AI's ease of use can lead to unexpected cost spikes, making cost controls essential. However, AI also offers potential solutions for cost management, such as automating visibility and decision-making. Salim identified security, governance, and cost as key considerations when implementing AI, noting that AI use cases will drive more data processing and querying, increasing data infrastructure costs. The experts agreed on the importance of starting with small-scale experiments to manage costs effectively.

Role of Data Governance in Cost Management

Data governance is essential for efficient cloud cost management. Salim described it as a way to prevent the "wild wild west" of data access and usage, emphasizing that proper governance ensures the right people have access to the right data, reducing unnecessary computation and costs. Deepak added that data governance also prevents redundant work, as well-prepared data is easily discoverable by all teams, avoiding repeated data processing efforts. By implementing a strong data governance framework, organizations can significantly reduce waste and optimize their cloud spending.

Tools and Practices for Cost Management

The session highlighted various tools and practices for effective cloud cost management. Deepak emphasized the importance of using optimized data formats like Parquet or Delta to reduce computation costs. Salim mentioned Capital One Slingshot, a tool designed to provide visibility, insights, and recommendations for managing Snowflake costs. Josh discussed Snowflake's built-in capabilities for monitoring and cost management, such as query tagging and warehouse metering history. The experts acknowledged the growing ecosystem of cost management tools and the importance of integrating these tools with existing systems to gain comprehensive visibility of cloud spending.

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