In the beginning, companies and cloud cost management vendors focused on reducing the absolute cost of the cloud. That would be the equivalent of solely focusing on the total cost of a sales organization versus considering how much new revenue they were booking, or the productivity of the sales team or the cost of customer acquisition. As cloud spend followed its rapid growth trajectory, curbing it most often relied on discounts.

One of the best features of the public cloud is that it utilizes a model that enables multiple organizations to share cloud resources. This approach leverages economies of scale, ensuring each tenant sharing those resources receives a lighter bill than if they utilized a private cloud dedicated to just them. Likewise, multi-tenancy in cloud computing is cloud architecture that enables multiple organizations/customers/users to share resources like virtual machines, storage, and server components.

When you’re already strapped for time and bogged down by cloud bills that seem higher than they should be, you may not be inclined to devote months to researching the best cloud cost tools. And unless you’ve used a cost tool before, you may have no idea where to start. What happens if you use multiple cloud providers? Is one payment scheme better than another? And what do you do if your company hasn’t stayed on top of tagging?

Your job as a Chief Financial Officer (CFO) carries a lot of weight, regardless of the size and industry of your organization. Among other responsibilities, you are directly accountable for ensuring your company's financial health by providing accurate, up-to-date, and actionable insights. Now, if your revenue comes from recurring subscription revenue, SaaS metrics form the backbone of your business. They measure your profitability and growth.

This is no secret to you. It costs up to seven times more to attract a new customer than to keep an existing one. Upselling an existing customer is also easier than upselling to a new one. So, keeping customers will increase your revenue and profitability. Not to mention, current customers are likely to buy more goods and services than new ones. But that's not all. The longer you keep a customer, the higher their Customer Lifetime Value (CLV) grows, thus maximizing your return on investment.

According to Gartner, organizations spent $410.9 billion on cloud services in 2021. In the same year, executives estimated that as much as 30% of their cloud spend was wasted. That’s an aggregate $123.27 billion of waste — money that could go toward innovation, or that could help insulate companies from one of the worst market downturns in years. Organizations face a dilemma: The cloud is essential to modern business, and it’s only getting costlier.

We have a term we like to use when we meet CFOs who have just gotten their biggest AWS bill ever: bill shock. Bill shock is when finance suddenly rings the alarm that the bill is “too high” and gets everyone scrambling to explain what they’re spending money on. It often happens when the bill reaches a new milestone (the first million, ten million, or hundred million) or growth trajectory (it doubled in a quarter!?). The problem with bill shock is that it can be highly disruptive.

Depending on your business reason for migrating to the cloud, you can either move in one go or incrementally. If, however, you prefer to retain some of your operations, app design, or workflows on-premise, you can still do so based on the cloud migration strategies you use. Sometimes, it makes more sense to modify your existing system rather than make too many changes all at once. Cost, data security, and service availability (thus revenue and customer experiences being impacted) are just three concerns.

You're not alone if you have trouble visualizing, measuring, and controlling your IT costs. Whether public or private, cloud computing can add to the cost problem. That’s because cloud computing offers on-demand resources, so misconfigured infrastructure, an overzealous engineer, or a blindsided operations team can do something that leads to a surprise cloud bill at the end of the month. But not so fast. What is cost optimization, and why is it different from IT cost reduction?

Organizations receive high monthly bills from cloud providers with no way of determining why the number changes from month to month or how to accurately predict future spend. More importantly, there is little information to provide visibility if cloud resources are being deployed efficiently or if spend is correlated to business performance.