What is cost-effectiveness when talking about a cloud system?

Cost-effectiveness, in terms of a cloud-based system, is essentially a well-architected workload that uses the most efficient and least costly resources.

A cost-effective system can be measured in numerous ways, but the most telling are those that plan for contingencies that prevent the product from costing more in the long run. This includes product malfunction or data breach, which should be accounted for alongside keeping costs low.

A lot more about this topic is covered in FinOps (Financial Operations), available in this toolkit. In particular, see the modules on EC2 and EBS systems.

Why would you want cost-effectiveness on the cloud?

Cost-effectiveness is a critical aspect of cloud services. It is essential to have a process that helps to optimize cloud spending and maximize the value of cloud investments. This enables the product to be worthwhile as a system and for it to sustain its own costs. The more a product can do this, the longer it can stay active as a product in the user market.

So, by creating a cost-effective process for cloud services, project managers can reduce unnecessary costs, improve return on investment (ROI), and ultimately deliver better customer value.

How does cost-effectiveness work for the cloud?

As mentioned above, cost-effectiveness can be measured by numerous metrics and are not always plainly obvious, particularly if they involve cost planning for a likely, but by no means guaranteed, event, such as expansion, recovery or transfer. The following are some items to tick off that affect cost-effectiveness:

  • Data transfer charges, including the cost of transferring over a system or data set.
  • Instance or snapshot recording, including how many to take and how they’re stored.
  • Cloud architecture building, including how many systems to put in place and access storage.
  • User interfaces, including how many users to load and how to maximize security.
  • Security systems, including data encryption, interfaces and other prevention, recovery and detection techniques. See the section on security within the toolkit for more information.
  • Data storage costs, including the data used by customers, project managers and developers.

Ongoing testing and design, including testing for security measures, scalability and elasticity.

The value of cost-effectiveness on the cloud

Creating a cost-effective process for cloud service can reduce unnecessary costs, improve our return on investment, and ultimately deliver better customer value. This helps to differentiate the cloud-based product from competitors, improve financial performance, and ultimately drive business growth and success.

Main advantages of cost-effectiveness

  • Enables efficient and cost-effective use of resources
  • Helps reduce infrastructure and operational costs
  • Enables more accurate cost forecasting and planning
  • Helps identify and eliminate unnecessary or unused resources
  • Improves overall business agility and competitiveness
  • Helps optimize return on investment (ROI) in cloud infrastructure

 Cloud-based servers and integrations 

  • AWS
  • Amazon RDS
  • Amazon DynamoDB

A common user story

“As a Product Manager, we want to create a cost-effective process for cloud services to ensure that we can optimize our cloud spending, reduce unnecessary costs, and maximize the value of our cloud investments. By identifying key factors that impact cloud costs, setting up a monitoring and analysis infrastructure, establishing clear cost optimization procedures and protocols, and using data analytics and machine learning to identify potential cost savings opportunities and optimize our cloud spending, we can reduce unnecessary costs, improve our return on investment, and ultimately deliver better value to our customers.”

Any questions?

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