In 2023, small to midsized businesses (SMBs) were expected to spend $1.45 trillion globally on IT — including cloud computing. However, with limited budgets and evolving business needs, SMBs need managed services providers to help optimize their cloud investments and achieve maximum return on investment.
Still, efficient cloud budget optimization is only possible through cloud resource allocation. These strategies ensure cost-effectiveness and enhance cloud computing environments’ performance, security, and agility.
Let’s explore three strategic resource allocation techniques. This will help uncover how MSPs can help SMBs leverage and implement them to drive business growth.
Virtualization
Sashank Purighalla
Traditionally, a physical server can only run one operating system and its associated applications. However, virtualization software — hypervisors — act like conductors, dividing the physical server’s resources (its central processing units, memory, and storage) into multiple isolated virtual environments called virtual machines (VMs).
Creating multiple VMs eliminates the need for dedicated hardware for each application. This consolidation translates to significant cost savings. SMBs can benefit from reduced hardware acquisition, maintenance expenses, energy consumption, and space requirements.
Additionally, virtualization empowers SMBs to respond swiftly to changing business needs. Provisioning new VMs takes minutes, enabling them to adapt their IT infrastructure to evolving demands without lengthy procurement processes. This agility fosters faster time-to-market and enhances their overall business responsiveness.
While most cloud providers offer virtualized resources by default, the level of control and implementation options for SMBs can vary. Cloud providers’ virtualization technology is easy to deploy without deep industry expertise. However, since Infrastructure-as-a-Service providers allow direct access to the underlying infrastructure, enabling users to configure their own chosen virtualization software, this allows for greater customization.
Virtualization should begin with a few noncritical applications and gradually scale up as the SMBs gain confidence and experience.
Cloud Rightsizing
Rightsizing is a process of meticulously aligning cloud resources to avoid either overprovisioning (wasted resources) or under-provisioning (hindered application performance).
Rightsizing relies on comprehensive monitoring of metrics — like CPU utilization, memory usage, and network traffic — to reveal instances or services that are consistently underemployed.
Once neglected resources are detected, SMBs can downsize those instances to smaller VMs or reduce the associated storage capacity, directly cutting cloud bills. Moreover, matching resources to application needs ensures mission-critical apps run smoothly without sluggishness that can disrupt business operations.
MSPs can leverage various tools for rightsizing their SMB clients, including AWS Trusted Advisor, Azure Advisor and Google Cloud Recommender, or bring in third-party cost-optimization platforms.
Reserved Instances
Reserved instances (RIs) are a purchasing option offered by major cloud providers. Users can commit to a specific instance type, region, and term — typically one to three years — in exchange for a significant discount compared to on-demand pricing. This discount can reach up to 72% with AWS, making RIs a compelling solution for workloads with predictable usage patterns.
For example, e-commerce stores can experience consistent traffic throughout the year, with spikes during holidays or sales events. RIs can offer cost savings for their base server needs, while additional on-demand instances can cater to peak periods.
Therefore, MSPs can recommend RIs to their SMB clients with consistent cloud usage patterns. The upfront commitment translates to substantial cost reductions compared to on-demand pricing, freeing up their budgets for other business priorities. Additionally, RIs provide predictable monthly payments, eliminating surprise spikes and simplifying budgeting and financial forecasting for their SMBs.
MSPs can then help their clients identify workloads well-suited for RIs by analyzing their cloud usage patterns. They can recommend which RI type is the most appropriate for them (standard, convertible, or scheduled) based on their specific needs and flexibility preferences. Most importantly, MSPs can guide SMBs on continuously monitoring their RI use and cloud spending to ensure they maximize their RI investment.
Through strategically integrating these resource allocation techniques, MSPs can help their SMB clients realize immediate cost efficiencies and unlock long-term benefits such as improved agility, resilience, and innovation capacity.
Sashank Purighalla is founder and CEO of BOS Framework.
Image: iStock
