Right-costing: the other half of the story
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 essential to understand right-sizing and right-costing completely, as they should be considered with equal weight and performed simultaneously.
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 specific 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 using them to 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, reducing the license sticker price depending on how many your organization purchases. This is usually 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 provide unique savings plans, which will reduce your costs based on several factors.
While IT plays a significant role in orchestrating these initiatives, right-costing isn’t usually a technologically intensive activity. The most challenging 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.