#23. The 80/20 Rule to Save Costs on Workload Optimizations

A simple approach to save a lot of $$$ on your Cloud Workloads

When it comes to cost optimization, I often see companies blindly following the recommendations from their Cloud dashboards or monitoring tools. While I have nothing against this approach, I believe most potential cost savings aren't shown in these dashboards. Why? Simply because the real savings come from aligning Cloud services with business value, not just from reducing infrastructure costs.

For example, while right-sizing an instance is a common saving recommendation on every dashboard, people often don't consider what is actually running on that instance, or more importantly, why they're using the instance at all. That for me is the real value of FinOps, not the generic recommendations we often see.

As a FinOps practitioner, you need a practical approach to thinking about and optimizing workload costs that goes beyond Cloud dashboards. This article will help you develop this approach.

Focus on What Matters First — The 80/20 Approach

To save costs beyond dashboard recommendations, you should prepare a comprehensive cloud cost optimization checklist. However, it's impractical to review every account and service for optimization. This is where the 80/20 methodology comes in: you can achieve 80% of potential savings through 20% of effort, while the remaining 20% of savings would require 80% of your effort.

The 80/20 approach to Cloud Workload Optimizations

The 80/20 Approach in Practice

So how how does that practically work? Here are the steps:

1. Allocate the Applications Driving 80% of the Total Cloud Costs

Start by allocating costs per application. Identify all production and non-production accounts belonging to the top 10 applications that drive about 80% of cloud costs. Typically, you'll find that just 3–5 applications account for this spending.

2. Analyze the Services Driving 80% of Cloud Spend in These Applications

For each major application, analyze the cloud services driving its costs. Focus on service types (compute, storage, databases, networking, etc.) rather than specific service names (like EC2 or S3). Usually, 3–5 service types account for 80% of each application's spend.

3. Evaluate the Business Value of These Services

Create a checklist of optimization opportunities for each service and discuss them with service owners.

For example, when examining storage services, investigate how the stored files serve the business. If the storage is used for logging, you might optimize by adjusting logging intensity, implementing archive policies, or managing retention periods. Create a reusable list of questions and actions that service owners can use independently to optimize costs, helping them take ownership of their cloud spending.

This approach helps you understand the business value of resources, rather than simply focusing on cloud resource optimization.

4. Improve Cost Optimizations Through the Remaining 20% of Cost Drivers

As your FinOps practice matures and time permits, tackle the remaining 20% of cost-driving applications and services to achieve comprehensive optimization.

Summary

To optimize workloads (Cloud Usage), adopt an 80/20 approach to achieve maximum savings with minimal effort, then gradually shift attention to the remaining opportunities.

This article has explained how this approach works. Future articles will explore detailed checklists for optimizing major services—storage, compute, databases, and networking.