As a company grows, its infrastructure needs to change. More employees need more space, new hardware, and software to purchase, etc. But often, companies don’t have the budget to keep up with their growth. This can cause a lot of trouble, from employee productivity loss to data breaches. In this article, we’ll look at some tips for managing infrastructure costs to keep your company growing without breaking the bank.
Stages of company growth and infrastructure cost prioritizing
Forrester’s 2020 report gives some advice on expenses management. Companies that are struggling to survive are advised to cut spending as much as possible. Growing organizations are better off focusing on investments. Companies that are doing well should concentrate on optimizing their spending. The report proves that infrastructure cost management strategy differs at various phases of company growth. Let’s look at stages of such an evolution and tips on how to manage your infrastructure costs at each of them:
Stage 1: Pre-revenue
At this stage, a company is focused on developing its product or service and has not yet generated any revenue. The main priority is to get the product or service to market as quickly and efficiently as possible. To do this, a company will often use free or low-cost resources, such as open-source software.
Stage 2: Start-up
In the second stage, a company has begun to generate revenue but is still considered in the early stages of growth. During this period, organizations focus on a scale of the business quickly and efficiently to drive growth. To do this, they will often invest in more expensive resources, such as custom software development.
Stage 3: Expansion
This is the period when a company has established itself in the market and is now looking to expand its operations. During this period, it focused on maintaining efficient operations and controlling costs. A company will often invest in automation and process improvements to do this.
Stage 4: Maturity
At the fourth stage of growth, a company has reached a point of stability and is no longer experiencing rapid growth. It focuses on optimizing costs and maintaining profitability. To do this, a company will often reduce expenses and improve efficiency.
Key strategies for managing infrastructure costs
A few game plans will help you reduce infrastructure spending, regardless of which growth stage your company is in.
1. Prioritize costs by impact
An effective way to prioritize expenses is to focus on those that will significantly impact the business. For example, at the pre-revenue stage, a company may prioritize marketing or customer acquisition investments over IT infrastructure. In the later stages, your top 3 IT technology priorities will be information security, remote work and collaboration, as well as public and multi-cloud infrastructure. As OpsRamp’s survey shows, business leaders have increased funding for these areas by 59%, 55%, and 50%.
2. Manage costs centrally
As a company grows, it may seem like a good idea to let each department manage its infrastructure costs. However, this can lead to duplication of effort and resources, as well as inconsistencies in how costs are controlled. It’s often more practical to centralize management of infrastructure expenses so that there is one clear strategy and set of procedures for the entire company.
3. Scaling up gradually
When possible, expand your infrastructure slowly rather than making a significant up-front investment. This will help you avoid overspending on the capacity that you may not need immediately.
4. Invest in cloud-based services wisely
Cloud-based services are one of the critical technological trends. They are a cost-effective way to get the infrastructure you need without making a large advance investment. But that doesn’t mean it’s impossible to waste resources on it. 2022 Flexera’s report about cloud computing trends shows that 32% of participating companies are overspending on clouds. They are over budget by an average of 13%. Cloud costs are growing every year: as Flexera predicted, cloud spending will increase by 29% in the next year.
There are two main ways how to save cloud costs:
Use instances
Instances are the foundation of your cloud infrastructure. When you purchase an instance, you rent a virtual server from the cloud provider. Instances have different prices, depending on the type you choose, as well as the region in which it is located.
How to optimize the cost of instances:
Use reserved instances: It is a type of cloud instance that you purchase for a set period, typically one or three years. By reserving it, you can save up to 75% on the cost of the instance.
Use spot instances: It is an unused instance that is available for purchase at a discounted price. Spot instances are a good option for tasks that can be interrupted, such as batch jobs or test servers. For example, with GCP’s Preemptible VM instances, you can save 60-91% of the costs you might spend on a standard Virtual Machine.
Use autoscaling: Autoscaling is a feature of some cloud providers that allows you to automatically scale your infrastructure up or down in response to changes in demand.
Use commitment plan
With a commitment plan, you make a one-time payment for a certain amount of computing usage, typically over one or three years. The benefit is that you are given a discount on your compute costs.
Use cloud cost management tools
They can help you optimize your cloud infrastructure and save money. These tools allow you to track your cloud usage, identify wasteful spending, and find ways to elevate your costs.
A few of the most popular cloud cost management tools include Amazon CloudWatch, CloudZero, Densify, Azure Cost Management + Billing, and ParkMyCloud.
Have a feeling that your cloud infrastructure may work more efficiently and cost less? Drop us a message! Our expert cloud engineers are ready to help.
5. Automate where possible
According to a 2020 study by Salesforce, 73% of business leaders say that automating tools saves between 10% to 50% on their costs previously spent on manual tasks. This is because automating tasks can help improve efficiency and accuracy and reduce the need for manual labor.
Some great examples of automated tasks include:
- Deploying code changes;
- Provisioning new servers;
- Configuring server settings;
- Monitoring server performance.
6. Manage demand
Make sure you understand your company’s infrastructure needs and only invest in a capacity that will be used. Excess capacity can be a high wasted cost.
7. Use cost-effective providers
When selecting infrastructure providers, choose those that offer cost-effective solutions that meet your company’s needs. Have difficulty finding reliable providers? Drop us a message, and our experts will advise on this matter.
8. Review costs regularly
Don’t let infrastructure costs get out of control. Review your spendings systematically and look for ways to reduce them.
Summary
Managing infrastructure expenses is an essential part of running a successful business. Several ways to save on this area include using reserved instances, spot instances, and autoscaling. Additionally, using cloud cost management tools can help you optimize your infrastructure and spare spendings. Finally, it’s essential to review your expenses regularly to identify areas where you can cut back on spending.
If you need help managing your infrastructure costs, our team of experts can assist you. We can provide custom development with calculated risks and solutions that will not lead to overspending. Contact us today to get started.
Read also: The cost of logistics & supply platform development
