Surfacing Hidden Cloud Costs Early:
A Strategic Imperative
The cost of cloud usage is something that keeps CTOS and CFOs up at night and incorrect choice of resource, or an incorrect setting can heavily impact budgets. As organisations accelerate their cloud adoption, many are discovering that managing cloud costs is more complex than anticipated. While the cloud offers scalability and flexibility, it also introduces new cost drivers that are often overlooked, leading to significant waste. In fact, McKinsey research reveals that 28% of cloud spend is wasted due to poor stewardship, overprovisioning, and lack of optimisation.
What Are the Most Overlooked Cost Drivers in Cloud Environments?
Every resource and most actions in the cloud generate cost. Without proper oversight, businesses can quickly find themselves paying for:
- Resources that are no longer needed or could be run on a schedule but remain active.
- Oversized infrastructure that exceeds the actual requirements of the workload.
- Lack of visibility into usage patterns and cost anomalies.
To surface these issues early, organisations should:
- Deprovision unused resources and configure workloads to run on a schedule where possible.
- Rightsize infrastructure to ensure resources are fit for purpose, not overbuilt.
- Leverage built-in tools like Azure Cost Monitor to uncover areas of unnecessary spend.
How Can FinOps Practices Help Align Cloud Spending with Business Value?
FinOps introduces a collaborative framework that brings finance and engineering together to manage cloud costs more effectively. This alignment enables:
- Transparency in cost management, with a single view of resource usage and spend.
- A cost-conscious mindset, where all stakeholders are committed to preventing unnecessary expenditure.
- Real-time or self-service reporting, making it easier to track spend and identify anomalies.
What Role Does Automation Play in Controlling Cloud Costs?
Automation is essential for eliminating waste and optimising resource usage. Key practices include:
- Rightsizing: Ensuring resources are adequate, but not excessive, for their purpose.
- Auto-scaling: Dynamically adjusting resources based on demand.
- Scheduled shutdowns: Ensuring resources are only active when needed.
These practices help ensure that businesses only incur costs for resources that are actively delivering value.
How Should Enterprises Approach Multi-Cloud or Hybrid Environments?
In multi-cloud or hybrid environments, cost optimisation requires discipline:
- Provision only what is truly needed.
- Ensure resources are right-sized for the job.
- Use automation to shut down resources when not in use.
- Destroy resources when they are no longer required.
This approach prevents resource sprawl and ensures that costs remain aligned with actual usage.
What Governance Models Help Ensure Cloud Cost Accountability?
Effective governance is critical to maintaining cost control across teams and departments. Key practices include:
- Tagging and chargeback models, which assign costs to specific departments and promote accountability.
- Cross-functional governance bodies, such as a Cloud Centre of Excellence, to provide oversight, strategic direction, and validation.
These models ensure that cloud spending is transparent, justified, and aligned with organisational priorities.
Real-World Example:
At Abstract Group, we recently worked with a large utility company to implement rightsizing and auto-shutdown of server-based resources. This initiative significantly reduced unnecessary spend and improved operational efficiency, demonstrating the tangible impact of proactive cloud cost management.
The Bottom Line
With 86% of companies increasing their cloud initiatives, the pressure to unlock full value from cloud investments is greater than ever. Yet without strategic cost optimisation, much of that value remains unrealised. As Vodafone demonstrated, implementing FinOps practices like rightsizing, auto-shutdown, and governance can lead to a 30% reduction in AWS cloud spend.
The message is clear: to realise the full potential of the cloud, organisations must prioritise visibility, accountability, and automation from the outset.
Speak With an Expert to discover how we can help you reduce waste, improve visibility, and align your cloud investments with your strategic goals.