Are you overspending on cloud services? If your organization is like most, you are -- you just may not know it. But there are strategies to optimize cloud forecasting, purchasing, and managing to save significant time and investment.

Cloud spending is top of mind for most IT executives for a number of reasons. According to a 2021 survey, cloud costs are over budget by 23% and will likely climb an additional 47% this year. Executives believe that 30% of cloud spending goes to waste, and most are not sure how to fix the problem.

The good news is that focusing on specific strategies can yield immediate and tangible benefits -- once you uncover the reasons for rising cloud costs.

Common Reasons for Wasted Cloud Services

1. Setting aside a piece of cloud, just in case

In IT we’re used to buying more than we need. It used to be that outfitting the company’s computing systems was analogous to looking into a crystal ball and asking, “What will the organization need before the next budget cycle?” Then we’d overbuild to ensure that our servers and equipment could handle unanticipated spikes in utilization.

The cloud changes this. There’s no need to pay for extra cloud now because you might need it later. Cloud services are dynamic, variable and auto scalable, allowing you to have just the right level of resources. Still, organizations habitually pay for more cloud than they need.

2. A bad case of zombies

In television shows and movies, zombies slowly shuffle towards us, making it easy to identify them and at least try to take them out. But in the cloud, zombies are menacingly quiet, idle resources that are easy to ignore. In cloud terms, zombies are a natural byproduct of routine activities. For example, something as innocuous as setting up a VM can create zombie resources. That’s because when you delete the VM, the associated resources, such as storage allocation and IP addresses, stick around like the undead.

If you’re not sure if you have zombie resources, you probably do. And while they’re not after your brains, they are extremely dangerous to the bottom line.

3. Employees who have a blocked view of the cloud

There may be times when the phrase ‘What you don’t know won’t hurt you’ may make sense, but cloud usage is not one of them. If an organization and its employees are unaware of their cloud spend, and how much infrastructure is in use, they are ill-equipped to drive cloud cost optimization.

Often organizations do not track cloud metrics, and when they do, there’s frequently a disconnect between those who have the information and those who could use the insights to better manage costs.

Getting Set for Cloud Cost Optimization

Cloud services represent a shift in resourcing. But the associated processes and approaches haven’t caught up in many organizations. To prepare for cloud cost optimization, organizations should focus on developing the ideal toolset, skillset, and mindset.

The cloud mindset

Right-sizing cloud spend requires a significant shift in mindset as the company goes from just-in-case provisioning to real-time resource scaling. To minimize waste, organizations must cultivate a culture of financial accountability. A cross-functional approach across planning, architecture and operations can position the company to cost-effectively scale to variable usage patterns and operating cloud services to minimize waste.

The cloud toolset

The good news is that the tools you need are probably right at your fingertips. Most cloud services offer free access to tooling that will help provide visibility to cloud utilization. But if you can’t get the information you need with the standard offering, there’s also a large ecosystem of more advanced third-party tools and platforms to help you optimize your cloud expenditures.

The cloud skillset

Of course, new shiny tools are nothing without the skills to use them. That’s why organizations must cultivate IT expertise in interpreting cloud cost and usage information -- and in implementing the necessary changes. Driving cloud cost optimization requires a solid technical background in cloud architecture and an understanding of the costs and business ramifications of various design patterns and potential alternatives.

Companies may not have the in-house expertise to fully execute a FinOps, or cloud financial management, strategy and should opt to work with a managed service provider (MSPs) that offers a cloud cost optimization service. Partners like this can bolster enterprise capabilities and ensure your company implements best practices and financial accountability.

The Bottom Line

Optimizing cloud costs can help organizations save up to 30-40% of their normal cloud expenditures. The go-forward model requires continuous nontraditional planning, design, tracking and reporting across multiple teams in IT, finance, and business stakeholder groups.