4 Strategies for Avoiding Accidental Overspending on Cloud Services

Organizations spend an estimated $679 billion on cloud services – a figure that is projected to grow by 20% between 2023 and 2024, according to industry research by Gartner. That’s because businesses recognize the essentiality of the cloud. Cloud services help organizations operate more efficiently, easily scale as their needs change, and tap into more powerful technology that is more cost-effective to maintain. At the same time, cloud services aren’t a magic bullet solution. Businesses can and often do overspend on cloud services. To prevent accidental overspending, it’s critical to understand how cloud services are billed, and the common pitfalls that businesses fall into as they transition more of their services to the cloud. Let’s explore four key strategies every business should deploy to avoid accidental overspending on cloud services:

1. Stay on top of cloud resources that aren’t being used: For every moment that cloud resources are running, businesses are paying for them. However, most organizations do not need all cloud resources to run at all times. Indeed, most cloud projects and initiatives should be periodically turned off based on the time of day or stage of the development cycle. However, as more aspects of the business transition to the cloud, it becomes harder to keep track. Thus, businesses need to stay on top of cloud utilization by maintaining proper documentation. A detailed cloud services catalog, for example, enables IT teams to look for opportunities to shut down unused resources, transition to more cost-effective plans and infrastructure, and implement auto-scaling features.
2. Take advantage of cost optimization tools: Cloud services are too vast and complex for any IT team to stay on top of every discount, tool, and update that could save money. Fortunately, major cloud service providers offer powerful, built-in tools to help. These tools enable organizations to track their cloud usage patterns and even point out suggested places where they could be saving money. Significantly, these cost optimization tools are readily customizable. For example, businesses can leverage tagging strategies (with auto-generated and user-defined tags) along with cost optimization tools to trace resources to cost centers, workloads, and owners. These tools can provide granular insights—down to the hour, if desired—into cloud usage and spending. Additionally, these tools help identify orphaned resources and projects that are no longer generating value.
3. Require centralized governance and control: In many organizations, governance, and control of cloud services have not been centralized. Different departments and divisions invest in cloud resources on their own, without coordinating with other teams. This leads to fragmentation and the inability to leverage and achieve economies of scale. Meanwhile, individual teams create shadow IT projects that utilize cloud resources. Because these projects lurk in the shadows, cloud governance teams have little ability to control or manage them. That’s why it’s so important for businesses to impose as much centralized governance and control of cloud resources as is realistic. To achieve this goal, organizations should be investing in connecting siloed teams and creating forums for listening to and truly understanding the needs of each team. Then, organizations should invest in developing balanced, thoughtful governance structures that provide flexibility and standardization.
4. Establish cloud resource allocation policies: When an organization does not have policies in place to govern cloud investments, individual departments and divisions will create their own. This can lead to non-coordinated, inefficient use of cloud resources that unnecessarily drives up costs. Thus, every business should establish centralized allocation policies for cloud resources. There’s no one-size-fits-all policy; every organization should be creating policies that fit with their workload requirements and strategic business objectives. General priorities should include fair sharing among departments and users, the ability to prioritize critical workloads, and optimization of cloud performance and responsiveness.

Cloud services have the potential to be extremely cost-effective, but only if a business knows how to avoid overspending pitfalls. To keep their cloud spending reined in, organizations should stay on top of cloud resources that aren’t being utilized, take advantage of built-in cost optimization tools, impose centralized governance and control, and establish equitable policies to guide how cloud resources are allocated across the organization.

To learn more about how to maximize cost efficiency with cloud services, please check out Ippon’s in-depth white paper, “Assessing the Maturity of Your Cloud Strategy.” For more personalized support and guidance, please reach out to our cloud migration experts.