Cost management is a constant balancing act for healthcare organizations. One factor can throw everything off, resulting in serious problems. To ease the strain, many providers are turning to the cloud. Unfortunately, this can end up backfiring.
While cloud services are often cheaper than alternatives, this all depends on how they are managed. The wrong strategy (or worse, no strategy at all) can ultimately cost you more than you ever saved by migrating. So what are some effective cloud cost optimization strategies for healthcare organizations?
How Cloud Costs Get So High
To optimize cloud costs, you first must understand where that money is disappearing to. There are several factors that lead to expenses getting out of hand:
- Over-Provisioning: Organizations tend to underestimate the cloud’s inherent scalability, and treat it as they would any other investment. That means they intentionally overpurchase, in anticipation of the day more resources may be needed. Unfortunately, this typically just results in waste.
- Lack of Oversight: Healthcare personnel are extremely busy, and often don’t have time to properly supervise their cloud assets. Because of this, small price increases and additional subscriptions can add up over time without anyone realizing.
- Duplicate Services: Most modern organizations leverage multiple cloud solutions at a time, in order to meet their highly specific needs. Without proper vetting, they may accidentally subscribe to multiple services that accomplish the same thing. One or more are often sitting unused, silently draining funds.
- Failure to Negotiate: Most vendors slowly increase their prices over time. Often they are trying to determine how high they can go before customers start to complain, which makes complacency expensive.
Learn how to build a cloud strategy unique to the healthcare sector’s needs
Cloud Cost Optimization Best Practices
These strategies will help you keep expenses under control:
1. Improve Governance
Step one is gaining proper oversight into your existing cloud infrastructure, costs, and usage. Inventory your assets. Which services are being used, what for, and how much do they cost?
Then, using this information, you’ll need to set firm policies and a cloud budget. What are you willing to spend, and how should investments be prioritized? Setting a clear baseline now will make it easier to ensure the rules are followed later.
2. Leverage Cloud Cost Optimization Tools
Many major providers offer built-in cloud cost optimization tools designed to work alongside their platforms. Take advantage of these wherever possible. They provide valuable insights into where money is going, and how expenses can be reduced.
3. Right-Size Cloud Resources
As tempting as it might be to over-provision resources, don’t. The cloud’s subscription-based model makes it extremely easy to upgrade as your business grows. There is no reason to purchase more than you need at this moment in time.
You should also remove any services that aren’t contributing value. Look for solutions that aren’t used regularly or perform the exact same function as something else. You should only be paying for cloud services that are necessary for daily operations.
4. Negotiate with Vendors
Speak to your provider and see if there’s a way to lower costs. Often, they will be willing to work with you. If not, then browse other offers and see if you can get the same thing cheaper elsewhere. You should never stick with a particular vendor out of pure loyalty, if the partnership is no longer benefitting you.
5. Use Reserved Instances and PAYG
A “Reserved instance” is a feature specific to AWS (Amazon Web Services) that allows you to save money on resources you regularly use, by committing to it for a longer period of time for a lower price. This can be a useful cost reduction measure if your usage is relatively predictable.
If demand is more varied, many providers offer a pay-as-you-go model. In this case, rather than purchasing a set amount of resources, you are charged in real time for actual use. This reduces waste by ensuring that you never pay for services you don’t need.
Read more: Protecting ePHI
When to Reach Out to An Expert
The problem with all of this, of course, is that healthcare organizations may not have time for any of it. Even maintaining existing IT infrastructure can be a challenge, let alone performing complex and time-consuming optimization tasks. This is where it might be helpful to partner with a managed service provider, or MSP. They can manage, optimize, and repair your cloud environment on your behalf.
If you notice any of the following signs, then it’s likely time to consider speaking with an MSP:
- Cloud costs are getting very high and you have no idea why
- You have no visibility into your cloud environment
- It’s becoming difficult to juggle multiple providers
- You lack the time or expertise necessary to manage the cloud on your own
Don’t Waste Funds That Are Better Spent Elsewhere
In healthcare, you can’t afford to waste money. Every dollar should be pulling its weight. But if you don’t have oversight into your cloud environment, important funds could be disappearing into the ether without your knowledge. Today, take some time to inventory your cloud assets – or if you can’t, reach out to a managed service provider. It might take some time out of your day, but it will be worth it in the long run.
At Ascentient, we specialize in helping healthcare providers manage their IT effectively. Our expertise covers everything from cloud computing to security, and we’re happy to share our knowledge. Get started by learning the basics of healthcare compliance.
FAQs
Why Are Our Cloud Costs So High? We Thought It Would Reduce Expenses.
While cloud solutions are often more cost-effective due to the subscription model used, much of this depends on resource utilization and vendor management. Without proper budgeting and forecasting, your cloud environment might become more expensive than the solutions you previously relied on.
What Are Some Effective Cloud Cost Optimization Techniques?
Before you do anything else, perform a cloud cost optimization assessment. Inventory your existing infrastructure, identify any gaps or wasted resources, and develop an action plan based on this information. Right-size your cloud environment (this means ensuring you pay only for what you need), and negotiate regularly with vendors to make sure you’re getting the best deal.
What About AWS Cloud Cost Optimization? What Can We Do?
AWS offers a special strategy called “reserved instances”. This essentially means you sign a contract agreeing to pay less for set resources over a longer period of time (usually one or three years). This can be invaluable for organizations with relatively predictable cloud needs.
Should We Use Cloud Cost Optimization Software?
Software solutions can be extremely useful for helping you understand where costs are coming from and how to reduce them. The best cloud cost optimization tools are usually offered by the service provider, and designed to work with their specific product.
How Often Should We Review Our Cloud Spend?
At bare minimum, your cloud spend should be reviewed each time your budget is updated. Use this opportunity to detect cost anomalies, address any problems, and keep investments aligned with your desired business outcomes.