The public cloud, such as AWS, Microsoft Azure, and Google Cloud Platform (GCP), provides a great deal of cost optimization with the pay-as-you-go model. The public cloud cost model allows customers to trade capital expenses for variable expenses, paying for IT resources as they consume them. Operational expenses are usually lower due to economies of scale. It could be cost-effective to be in the cloud and get the benefit of continued price reductions that occur over time. The other advantage is that you get additional tools and functionality out of the box with a cloud provider such as AWS, which helps you to achieve better agility.

You need a different mindset when defining the cloud cost structure model as it is pretty different from traditional cost, most of which most enterprises have been following for decades. In the cloud, you have all the infrastructure available at your fingertips, which requires greater control and regulation. Clouds provide several tools for cost governance and regularization. For example, in AWS, you can set up service limits per account, so the dev team cannot utilize more than 10 servers, and production can have the required number of servers and databases with a buffer.

In the cloud, all resources are associated with accounts, so it's easy to keep track of IT resource inventories in a single place and monitor their utilization. In addition to that, you get tools that can collect data across various IT resources and provide suggestions. As shown in the following screenshot, AWS Trusted Advisor crawls through all resources in the account and offers cost-saving recommendations based on resource utilization:

In the preceding screenshot, Trusted Advisor has detected continuous utilization of the application server (Elastic Cloud computing, EC2) and advises buying a reserve instance by paying 1 year upfront with a 40% cost saving. Further checks have identified an underutilized database (Amazon RDS) and suggest shutting it down to make a potential saving.

The cloud can provide an excellent value proposition for cost-saving. To begin with, you can create a hybrid cloud, where you establish connectivity between your on-premises data center and the cloud. You can move development and test servers to the cloud to determine cost structure and potential savings. Once you have set up cost governance in the cloud, move more workload as per the cost-benefit analysis. However, you need to assess your workload and whether it can be moved to the cloud and define a strategy. You learned about cloud migration in Chapter 5, Cloud Migration and Hybrid Cloud Architecture Design.

Increasingly, public cloud providers are offering managed services, which eliminates any infrastructure maintenance cost and overheads for alert and monitoring configurations. A managed service reduces the total costs of ownership by reducing cost as service adoption increases.