The future of the cloud is bright as businesses move more and more workloads to the cloud. Even today, the cloud is increasingly empowering apps and web services to run seamlessly, providing a great user experience. But are the businesses able to derive any real value from their cloud spending, or are they struggling to get a handle on it?

According to the Flexera 2021 State of the Cloud Report, organizations spend an average of 24% more than the forecasted budget on cloud services. The high operational cost has become a major pain point for enterprises using cloud services these days. Therefore, monitoring and optimizing cloud costs is more crucial now than ever, but it has its own set of challenges.

This article will discuss the most common cloud cost management challenges that organizations face today.

Let’s begin. 

6 Common Cloud Cost Optimization Challenges

Resource sprawl

The easy provisioning of cloud services can lead to resource sprawl and incur unexpected costs. For instance, when point-and-click consoles and APIs are easily accessible, it can lead to resource sprawl without any capacity constraints. In addition, the inherent scalability and flexibility of the cloud without a governance model can multiply the cost of resource sprawl.

Organizations must assess how many resources they will require and monitor how the cloud service providers are allocating them. Overprovisioning leads to idle or unused resources, meaning more costs, while under-provisioning affects the performance and results in a poor user experience.

Lack of visibility

According to a 2018 study on challenges associated with cloud operations by Ixia, Keysight, 95% of professionals had reported that insufficient cloud visibility caused application or network performance issues. In addition, the lack of visibility into your cloud environments has numerous other ramifications, including delays in identifying and resolving security threats.

Even though organizations define cost ownership and do initial sizing, day-to-day visibility is crucial. Because resources can be easily created in the cloud, and you may face cloud sprawl. It refers to the uncontrolled growth of cloud services, instances, or even more providers.

Cloud cost optimization tools like an intuitive dashboard can help monitor, manage and optimize cloud costs. With granular visibility, actionable insights, and metrics like cloud utilization trends, it can help the stakeholder better manage the costs.

Billing complexity

Cloud providers constantly change billing and invoicing practices, leading to unnecessary complexities in cloud cost management. Even the major public cloud providers such as AWS, Microsoft Azure, and Google Cloud Platform (GCP) do not have standardized billing models, formats, APIs, or services. Moreover, multilayered pricing and billing structures riddled with technical specifications make the cloud bills incomprehensible to your finance team.

Enterprises waste a significant 30% of their cloud spend, which can be otherwise saved by using the right tools for managing and optimizing cloud costs. Containers, serverless services, and auto-scaling features offered by some cloud vendors also help avoid cost overruns. For more cost optimization ideas, read this detailed blog on cloud cost optimization strategies.

Difficulty in budget forecasting

Numerous cloud providers offer autoscaling features to control cloud costs. For instance, AWS allows you to scale certain cloud services automatically like virtual machines, based on parameters set by you. But such features only help up to an extent.

When new services or apps are introduced, it is vital to consider the fluctuations in costs caused by them. Unfortunately, it makes budget forecasting a complex task. It requires setting up processes, workflows, expertise, and the right data. However, using intelligent cloud cost optimizations tools with advanced forecasting abilities can help predict future cloud bills.

Poor or sub-optimal architecture design

Software architects and IT professionals rarely consider the cost associated with specific features while designing a cloud application architecture. For example, the price of a particular query for a widget in a web application might cost thousands of dollars. But what if the same can be installed using a different but less costly alternative?

Organizations struggle to identify the most cost-effective alternatives to deliver a requirement due to the lack of skills and experience of professionals. As a result, it leads to poorly designed applications that fail to provide the true value of the cloud platform.

Misaligned approach between teams/departments

Each team or department in your organization might have a different approach towards managing cloud resources and costs. If all the teams use different policies and methodologies, your cloud cost optimization efforts might go in vain. Engineering teams, for instance, DevOps, might not always take optimizing cloud costs into consideration because they need the cost flexibility to deliver the best results possible.

To avoid such hindrances, departments such as Finance, Business, and IT must work together to align the policies to manage cloud costs successfully.

Conclusion

The above challenges make cloud cost management a daunting task. But it is not just an operational concern anymore; it is a strategic, value-driven move for businesses. It calls for a paradigm shift at many levels in an organization to ensure cloud spends are used optimally and responsibly. Additionally, there are a lot of techniques, strategies, and tools available to ease cloud cost management, but that is a topic for an entirely new blog. But for now, look out for these challenges while working with the cloud.

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