Now let’s closely examine the concept of right-costing. Right-costing is an often-ignored facet of Cloud Cost Optimization, but neglecting to do it is a serious oversight. It’s important to understand right-sizing and right-costing completely, as they should be considered with equal weight and performed at the same time.
Right-costing is a process that leverages commercial resources to give you the best deal on software and cloud solutions. This often involves tactics to get certain licenses for free or at a reduced cost, by transferring existing on-premise licenses to the cloud, removing excessive licenses or solutions, or simply Taking advantage of different cloud usage rights provided by some software publishers and use them at your advantage.
Right-costing can also take the form of special discounts that must be negotiated with the cloud vendor. Vendors often offer volume-based discounts, which will reduce the sticker price for licenses depending on how many your organization purchases. In most cases, this is far cheaper than paying for the software components billed together with cloud computing resources.
Organizations should also take advantage of reserved instances, where vendors offer discounted pricing if you can predetermine how much computing capacity you will need in a set space of time. Some vendors may also offer unique savings plans, which will reduce your costs based on a number of factors.
While IT plays a significant role in orchestrating these initiatives, right-costing isn’t usually a technologically intensive activity. The most difficult part for the IT team is gaining visibility over the licenses you currently have versus how many you need – once that is determined, IT tends to take a supporting role.
That’s because right-costing is designed to lower expenses first and foremost, with little to no trickle-down effect that would improve efficiency and increase revenue. This is why right-costing absolutely must be performed in conjunction with right-sizing – both depend on each other to optimize cloud costs while enhancing efficiency.