Cloud Spend Management

What is cloud spend management?

Cloud spend management challenges

The benefits of effective cloud spend management

Prepare cloud budgets with greater predictability

Save up to 60% on your AWS EC2 spend

Fulfill your EDP commitment obligations

Free up valuable time while managing your cloud spend

Cloud spend management FAQs

Cloud spend management, also known as cloud cost management, enables organizations to gain visibility into their cloud spending.

This involves gaining a thorough understanding of cloud usage patterns, identifying areas of inefficiency or waste, and implementing measures to prevent unnecessary expenses.

Larger enterprises routinely use over 450 cloud services, while even small businesses can rack up over 100. As a result, it can be hard to spot instances where resources are wasted or used inefficiently. Learning the main challenges organizations face while managing their cloud portfolios provides vital insight: 

• Variable pricing models – Cloud vendors offer various dynamic pricing models, making it challenging to predict and control costs. Choosing the optimal subscription for your specific teams and workloads to avoid overspending or underprovisioning is a fundamental part of cloud spend management. For example, you might find that a percentage-per-sale deal works better than a set monthly price for ecommerce fraud prevention. 
• Visibility issues – A lack of clear visibility into cloud spending by stakeholders across an organization is bound to cause issues. Without this knowledge, separate teams can mistakenly pay double for repeat subscriptions, generating needless wastage and inefficient resource allocation. 
• Resource usage and scalability – Cloud spend management requires keen acumen for resource usage and scalability, ensuring costs don’t spiral as a business grows. On the one hand, budget must be available for scaling cloud services if required, but on the other, idle resources incur unnecessary expenses. Consistent cost reports and autoscaling are two useful ways to combat inefficiency in this area.  
• Separate workflows – Reconciling different workflows and tools used by various teams is challenging, especially in larger organizations. For example, DevOps may work with several APIs during the development stage alone. Juggling these with AppSec solutions used by security teams and staying financially consistent is a significant cloud spend management obstacle.  
• Feature overlap – What happens if you have two cloud products with overlapping features? Wasted spending. This is where a cloud cost optimization platform like Vertice can pay particular dividends. Our platform helps you spot areas where two cloud services are doing the same thing and modify your subscriptions to combat wastage. 
• Cost allocation discrepancies – Accurately allocating cloud costs to specific departments, projects, or business units can be tricky. Mistakes can lead to a skewed idea of spending overall, making any cloud cost management strategies prone to failure. Take a complex marketing project. This could simultaneously leverage account-based marketing, sales enablement, and digital advertising vendors. Watertight calculations are required to keep accurate tabs on spending and react accordingly. 
• Multi-cloud environments – Combining several public cloud providers poses a significant cloud spend management challenge, requiring consolidated billing and more complex accounting. Hybrid cloud environments are even trickier, as mixing cloud and on-premises services is more likely to incorporate vastly different pricing models.
• Choosing a cloud cost management platform – Organizations can choose from an increasing number of cloud cost management solutions, but selecting the right service can be challenging. The Vertice platform provides a white-glove solution that goes above and beyond typical cloud cost management services, leveraging advanced machine learning and unique industry insights to procure, manage, and maintain cloud contracts as cost-effectively as possible.

The benefits of a winning cloud cost management strategy far outweigh the extra effort. The main advantages include: 

• Reduced cloud bill – The most straightforward benefit from effective cloud spend management is a reduced cloud bill. Putting these principles in place and leveraging a cloud spend management platform like Vertice can eliminate overspending, cutting your cloud-related outgoings by as much as 25%.  
• Better cost visibility – Implementing a cloud spend management platform and following Cloud FinOps principles to maintain complete visibility across an organization delivers on-demand cost monitoring and spend information. This visibility not only reduces existing costs, it also helps teams take more accurate financial decisions for future projects. 
• Optimal resource usage – Successful cloud spend management optimizes how organizations use cloud resources, a major benefit compared to on-premise solutions in particular. The dynamic pricing plans offered by many vendors means businesses can scale up or down depending on demand. A cloud spend management platform easily alerts you to opportunities to do so, saving significant time compared to manual auditing. 
• Cheaper procurement – SaaS pricing is notoriously difficult to pin down before entering negotiation. The Vertice cloud spend management platform leverages inside information on what other customers are paying to negotiate the best price. This can deliver considerably cheaper procurement, cutting your overall cloud bill. 
• Integrated cloud infrastructure – Adopting effective cloud spend management creates a more unified cloud infrastructures, simultaneously optimizing cost allocation and integrating workflows from across an organization. The financial benefit is obvious, but this also streamlines operations, leading to stronger revenue and faster time-to-market. 
• Increased ROI – ROI is one of the most important metrics for businesses to consider, and cloud spend management unlocks significant opportunities to boost the ceiling. A successful strategy allows an optimized approach to cloud investment, whether that’s procuring new contracts or modifying existing subscriptions. And it’s not just financial – boosted ROI can also come from better workflows made possible by a careful attitude to cloud spend. 
• Transparent cost allocation – Accurate allocation of cloud costs to specific departments or projects enables clear accountability and informed decision-making. The transparency makes a holistic overview of cloud spend far easier to appreciate, helping businesses understand exactly where their spending is used and to what effect. 
• More strategic decision-making – A cloud spend management platform provides data-driven insights that empower businesses to make far more strategic decisions regarding cloud resource usage, pricing models, and optimization strategies. Tactical cloud cost optimization is key to successful management, but it’s only possible with watertight and extensive data. 
• Unified dashboards – Cloud spend management demands unified dashboards rather than a fragmented approach. This simplifies monitoring, analysis, and identification of cloud cost optimization opportunities as well as other ways you could positively remold your business operations.     
• Improved agility and scalability – Cloud spend management creates fertile ground for agility and scalability, enabling businesses to respond rapidly to opportunities without requiring precautionary audits or cost reports. This approach also simplified cloud migration further down the line, leaving businesses less brittle and more proactive. 
• Enhanced FinOps – Cloud spend management doesn’t just control costs. It’s a tangible manifestation of a broader Cloud FinOps philosophy promoting a collaborative approach that ultimately increases employee satisfaction, business value, and innovation. Organizations able to harness this power will naturally run more smoothly and efficiently, contributing to sustainable and secure growth.
• Reduced security risks – As an example of why cloud spend management isn’t solely related to cutting costs, businesses can actually find they’re spending too little budget on security solutions during analysis. This brings potentially vital resources into the security sphere, protecting data and applications to minimize security breaches. Preventing data breaches also reduces losses, so it’s a win-win situation.
• Improved compliance – A byproduct of cloud spend management is often improved compliance. Organizations become more aware of their SaaS stacks when implementing strategic cost analysis, highlighting potential problems with licensing or regulation. Vertice’s cloud spend management platform excels in this regard with real-time compliance and diligence insights.

With cloud costs varying drastically across any given day, week or month depending on your business model and the cloud services you’re using, the ability to manually predict and effectively manage cloud spend is near-on impossible – even with the standard Amazon Web Services (AWS) tools in place.

With Vertice’s cloud forecasting insights, you can prepare cloud budgets and cash flow models with far greater predictability. This is because the platform:

• Allows you to drill-down into your current and historic cost drivers and see both short and mid term variability, as well as YoY growth projections
• Provides a breakdown of your costs and usage by product, service, category and purchase option
• Leverages thousands of data points, making it easy for you to create product line P&Ls by accurately attributing your costs

Managing discount commitments is not only cumbersome, but the manual management of a Reserved Instance (RI) portfolio is also incredibly complex and often results in over or under provisioning. As a result, you can end up either wasting resources and achieving suboptimal cost savings, or pay higher fees and risk performance.

More specifically, our platform:
 

• Manages your entire RI inventory, coverage and utilization in one place
• Provides you with granular control at a product, instance family and region level
• Continuously monitors your usage to make the most informed recommendations

AWS’ Enterprise Discount Program (EDP) has the potential to drive significant cost savings, but if your organization fails to meet the committed spending levels, you not only risk losing out on the discount, but you may also incur hefty financial penalties.

With a cloud spend management solution in place, this can be prevented. At Vertice, we will continuously monitor your EDP utilization and provide you with full visibility of your ongoing usage. In addition to this, we will:
 

• Provide you with an understanding of how you are tracking against AWS’ break even points
• Advise on key contract terms, term length and commitment growth
• Deploy our negotiation expertise and benchmark data to negotiate the highest savings and best possible terms

Optimizing cloud costs is both complex and resource intensive. Even for organizations that can afford to dedicate valuable engineering resources to the task, the full breadth of cost savings are rarely uncovered.

While this is largely down to lack of cloud spend and usage visibility across different services, accounts and regions, cloud workloads are also often dynamic with fluctuating demands. This means that in order to control spend, you need to analyze usage patterns, manually identify peak and idle periods, and determine the optimal allocation of resources, each of which requires a huge amount of time and effort.

With Vertice, it doesn’t need to.

• Get detailed and actionable savings recommendations that require minimal engineering effort – some are even automatically implemented on your behalf
• View comprehensive cloud spend and usage information, presented it in a simple and digestible format

Learn more about gaining unparalleled cloud visibility ›