Why is my cloud bill so high?

Organizations across markets and industries face a common problem with increasing urgency: "Why is our cloud bill so astronomical?" What began as a strategic move to eliminate capital expenditures and gain scalability has evolved into a significant operational expense that often goes unchecked. If you're experiencing heartburn when you see your cloud bill, you aren’t alone. 

The growing cloud cost crisis 

Recent industry research reveals that organizations typically waste 30-35% of their cloud spend. For enterprise-level organizations, this translates to millions in unnecessary expenses. Research from McKinsey found that companies typically overspend in the cloud by 20-50% due to inefficient resource management and a lack of cost optimization. 

Understanding the “why” 

• Overprovisioning: Many organizations operate under a "better safe than sorry" approach, purchasing more computing resources than necessary to avoid performance issues. This results in instances running at just 20-40% utilization while being paid for at 100% of the cost. 
  
  
• Zombie infrastructure: Decommissioned applications often leave behind storage volumes, IP addresses and other resources that continue to generate charges. These "zombie" resources can account for 15-20% of monthly cloud bills. 
  
  
• Lack of optimization: Without proper governance, development teams tend to deploy resources without considering the monetary impact. Default configurations rarely represent the most cost-effective approach for specific workloads. 
  
  
• Complex pricing models: Cloud providers offer thousands of service combinations with intricate pricing structures that change frequently. This complexity makes it nearly impossible for organizations to track and optimize costs manually. 

How to rein in cloud spending 

While cloud cost optimization has its challenges, there are effective approaches that can help. 

• RIGHTSIZE: Analyze utilization patterns to match resource allocation with actual needs. This may involve downsizing over-provisioned instances or switching to different instances altogether. Organizations typically achieve 20-30% immediate savings through basic rightsizing. 
  
  
• Automate: Deploy automated policies that shut down non-production resources during off-hours. Development and testing environments often only need to run during business hours, reducing costs for these resources upwards of 65%. 
  
  
• Leverage discounts: Most cloud providers offer significant discounts (often 20-70%) if you commit to use. Analyze your stable, predictable workloads and purchase reserved instances or savings plans to dramatically reduce costs. 

How can we help? 

Managing cloud costs efficiently often requires specialized expertise that many organizations lack internally. This is where we come in. 

• Cost optimization assessments: Analyzing current cloud environments can identify immediate and long-term savings opportunities without compromising performance or security. 
  
  
• Utilize our FinCloud talent: Establish governance frameworks, chargeback models and optimization roadmaps tailored to your organization's specific needs. 
  
  
• Tap into our monitoring talent: Experts who understand what implementing tools to use that will continuously track resource utilization and spending patterns and provide actionable recommendations and alerts when costs exceed established thresholds. 
  
  
• Multi-cloud strategy development: We can put a team in place to build frameworks that leverage the best services across different providers while optimizing for both performance and cost. 
  
  

The cloud offers tremendous benefits in terms of agility, scalability and innovation potential. But this requires effective management of associated costs. By implementing proper governance, leveraging optimization tools and working with experienced partners, organizations can typically reduce their cloud spending by 25-40% while maintaining or even improving performance. 

We're here to help you scale your organization, reduce your cloud costs and achieve your business and technology goals. Learn more about our infrastructure and cloud offerings today.