Cash flow is the lifeblood of any business. For mature enterprises, the ebbs and flows of cash through the company require constant care and attention. For growing SaaS businesses, cash flow is even more critical - it determines the available futures and governs almost every decision. Optimising costs creates freedom of choice and creates time - time to grow, time to invest, time before raising more capital, time to course-correct, and time to think.
Cloud Cost Optimisation
Regardless of SaaS company size, cloud cost optimisation is an essential process to ensure that your business invests efficiently and makes a significant impact. While it’s easy to simplify this requirement as ‘just spend less’, we must consider all forms of cost.
It is easy to fixate on the direct costs of your cloud environment, especially when they are a large and growing component of your monthly expenses. Cost savings is the primary goal, but optimisation – which is finding the optimal set of trade-offs – requires a holistic approach.
Types of Costs
Costs can take several forms, and each needs to be considered to achieve real savings:
- Financial: The most visible yet sometimes deceptive costs. Visibility makes it the usual target for cost savings, but even substantial direct cost savings may leave higher intangible costs in the business.
- Labour: Less visible but somewhat quantifiable. Labour costs and cloud costs are typically the two largest cost centres in a SaaS company. Employees are a very valuable (and often scarce) resource.
- Opportunity: Time is limited! Utilising time in the wrong way will limit growth. Even if reducing financial costs, time spent doing unnecessary or low-impact work could have been spent on more valuable activities, such as shipping more features, squashing bugs and winning new customers.
- Technical Debt: Almost all SaaS companies have substantial technical debt, usually from optimising for time or convenience earlier in their growth journey. Companies implement fixes for the shorter term without giving longer-term needs much thought, and eventually, it catches up, often at a most inconvenient time.
When performing a cost-optimisation review, it’s essential to assess all of the potential costs and appropriate trade-off. This often means increasing the direct financial cost of a particular resource or environment, to reduce other costs.
A common scenario is selecting a PaaS service over an IaaS service. PaaS services are often (slightly) more expensive than the equivalent IaaS service, but can provide surprising savings in labour, opportunity and technical debt over time.
The value of spending the precious engineering time you have available on shipping product versus building and maintaining infrastructure compounds rapidly. No one ever wishes a finished product had shipped later after all!
Finally, compliance, security and reliability ultimately govern cost optimization. Cost controls take a back seat when the site is down and customers are unhappy! Likewise, security and compliance are critical for maintaining customer trust and happiness. Reducing unnecessary costs and improving efficiency allows resources to be reallocated to achieve better outcomes.
At Parallo, we help our customers find their zen of cloud cost optimisation. While each business and cloud environment is different, we always look holistically at costs to find the ultimate trade-offs and the best outcome.