Uncertainties Created by Unpredictable Cloud Spend

By Greg Tavarez, TMCnet Editor  |  April 26, 2024

The cloud computing industry is experiencing explosive growth, with spending on public cloud services projected to reach a staggering $678.8 billion this year, according to Gartner. And with it, this expansion calls for a critical need for cloud cost optimization.

Here's why: Cloud services offer immense flexibility and scalability, but without proper cost optimization, expenses can easily spiral out of control.

Effective cloud cost optimization goes beyond simply cutting costs. It's about transforming the vast amount of data generated by your cloud usage into actionable insights. By analyzing this data, you can identify areas of inefficiency, eliminate wasted resources and make certain you're paying only for what you use.

Cloud cost optimization is the key to unlocking the full potential of the cloud because it allows businesses to leverage its benefits without getting bogged down by excessive costs.

But, of course, achieving ideal cloud cost optimization is easier said than done, and complications do arise.

In this vein, a new report by CloudZero, the 2024 State of Cloud Cost Report, reveals a clear connection between poor cost visibility and hindered job performance.

Perhaps the most striking finding in the report is the near-universal impact of limited cost visibility. Nearly nine out of 10 respondents reported that a lack of transparency into cloud spending hinders their ability to perform their jobs effectively. Almost half experience a significant impact, and 11% say it has no effect.

Without clear visibility, employees are left flying blind. This leads to several problems. Resources might be left idle, which leads to wasted spending. Teams might overestimate their needs and allocate more resources than necessary. Working in an environment where costs are unclear can lead to frustration and decreased productivity.

Job security also emerges as a major concern linked to cloud spending. Three-fourths of respondents expressed fear of job losses in the event of a sudden 50% or more surge in cloud costs. This anxiety is particularly acute in larger companies, where all respondents working at organizations exceeding 9,000 employees reported feeling vulnerable.

The rationale behind this concern is clear. Unforeseen cloud cost surges put immense pressure on companies to find ways to cut back. This pressure often translates into budget adjustments, and in worst-case scenarios, layoffs. Employees become acutely aware of their expendability. They worry that their roles might be deemed non-essential if cloud spending spirals out of control.

The report then continues and highlights a shift in confidence regarding cloud cost attribution. While public companies previously struggled more than their venture-backed or private equity counterparts, the 2024 data shows venture-backed companies now have the least confidence in accurately assigning cloud expenses.

The survey does emphasize the value of engineers taking ownership of cloud expenditures. When engineers have a stake in managing cloud costs, the data suggests a positive ripple effect, including increased confidence in cost reporting accuracy. In fact, 81% of respondents indicated their cloud costs were on track when engineering held some level of accountability.

"Our founding principle was that cloud cost optimization starts with engineers. Every engineering decision is a buying decision, and when engineers have complete visibility into their cloud costs, they can make smart buying decisions,” said Phil Pergola, CEO of CloudZero. “These results only substantiate this principle. Better visibility leads to better engineering engagement, which in turn fuels better business outcomes — money saved, accountability promoted, profit maximized and jobs secured."

If anything should be taken away from CloudZero's report, it's the need for improved cost visibility and potentially a shift in ownership to help engineers and finance professionals optimize cloud spending and ensure its strategic alignment with business goals.

Edited by Alex Passett
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