The COVID-19 pandemic has accelerated the adoption of various technological advancements to keep up with the evolving market and the shifts.
Among such shifts is cloud services, with organisations depending on the cloud to support remote work and digital transformation initiatives.
The rapid adoption of this technological advancement led to unexpected challenges in managing cloud costs, a concern finance leaders must handle properly for the organisation.
As cloud spending continues to increase, many compaies face cost overruns and unexpected expenses. Unplanned cloud adoptions, lack of merger and acquisition integration, and data egress charges are among the top reasons for such cost overruns.
To effectively manage cloud costs, finance leaders need to take a proactive approach and establish robust cost management practices. Cloud cost management involves analysing and optimising cloud spend to ensure that organisations are getting the most value for their investment.
So how must finance leaders handle the rising cloud costs?
Establishing a cloud cost management team
One of the key steps finance leaders can take is to create a dedicated cloud cost management team, which will include members from finance, IT, and other relevant departments.
The team’s primary responsibility will be to monitor and control cloud spending, identify cost-saving opportunities, and ensure cost optimisation across the organization.
Assigning ownership of cloud resources to specific teams or individuals is essential for effective cost management.
By clearly defining cost ownership, organisations can promote accountability and better control cloud spending. Each team or department should be responsible for monitoring and managing the costs associated with their allocated cloud resources.
Defining clear budgets for cloud spending is also crucial to ensure cost control. Finance leaders should work with IT and business leaders to establish realistic cloud budgets based on the organisation’s needs and priorities.
Moreover, organisations should implement policies for resource provisioning, usage, and cost allocation as these will help enforce cost-conscious behaviour and prevent unnecessary spending.
Organisations need real-time visibility into their spending and implementing cloud cost management tools can provide valuable insights into cloud usage and expenditure. Such tools enable organisations to monitor spending in real-time, generate reports, and identify cost anomalies and trends. By regularly reviewing cost reports, finance leaders can proactively address any cost overruns or inefficiencies.
Implementing resource right sizing
Resource right sizing is an essential strategy for optimising cloud costs.
By analysing resource utilisation data, organisations can determine the appropriate size and capacity of their cloud instances. Right sizing ensures that resources are neither underutilised nor overprovisioned, resulting in cost savings without compromising performance.
Similarly, data transfer costs can often be a significant expense in cloud environments. Finance leaders should closely monitor data transfer costs between different services and regions. By optimising data transfer and caching frequently accessed data, organisations can reduce unnecessary costs associated with data movement.
Automation too plays a crucial role in cost optimisation. Finance leaders should explore automation and scripting tools to perform cost optimisation tasks.
By leveraging automation, organisations can achieve cost savings and improve overall operational efficiency.
