Cloud Spend Management

Monitor, analyze and control
your cloud spend

In today’s digital landscape, effective cloud spend management is crucial for businesses of all sizes, whether you’re a nimble startup or global powerhouse.

As cloud adoption accelerates, so does the need for strategic financial oversight to ensure investments are optimized and waste is minimized. The challenge lies in accurately tracking and managing cloud expenditures.

That’s where cloud spend management comes into play. With Vertice’s Cloud Cost Optimization platform, organizations can gain clear insights into their cloud expenses, optimize cloud resources, and boost their cloud ROI — often saving up to 25% on costs.

Keep reading to discover more about cloud spend management, its importance, and how Vertice can empower your business to optimize cloud investments efficiently in 2024 and beyond.

What is cloud spend management?

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.

Cloud spend management challenges

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 effective cloud spend management

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.

5 steps to improve your cloud spend management

Improving cloud expense management requires a strategic approach — but it doesn’t have to be daunting. By following our step-by-step guide below, you can gain control over your cloud costs, optimize resource usage, and maximize the return on your cloud investments. By implementing these practices, not only will you save money, but you’ll ensure your cloud infrastructure is aligned with your business goals and operational needs.

1. Ensure visibility

First of all, you need a clear picture of your cloud footprint. It’s worth investing in cloud cost management tools such as Azure Cost Management, Google Cloud Cost Management, or Vertice’s own Cloud Cost Optimization platform for AWS. These solutions provide detailed insights into your cloud expenses, with custom observability dashboards displaying key spending metrics in real time, and automated alerts that signal when costs exceed predefined thresholds. It may also help to consolidate all your cloud contracts under a single billing account to simplify tracking and reporting.  

2. Detailed reporting

Regular reviews of your costs across cloud platforms is essential if you want to identify trends and areas for improvement. Many cloud management tools let you generate detailed monthly and quarterly spending reports — the more granular these are, the easier it is to pinpoint specific areas of high expenditure. 

One strategy you can implement here is tagging, which lets you categorize cloud resources by project, department, or environment (e.g. development, testing, or production). This way, you can accurately allocate costs across your organization and better understand who’s responsible for cloud expenditures. 

3. Optimize usage

You should regularly analyze the utilization rates of your cloud resources to identify underused or idle instances. That way, you can scale down over-provisioned services to more appropriate levels to save costs. Implementing auto-scaling can make this task easier, a feature which dynamically adjusts your cloud resources based on demand so you only pay for what you use. 

This is just one capability of Vertice’s Cloud Cost Optimization tool, which can intelligently buy and sell AWS reserved instances (RIs) to automate savings on your compute spend. 

4. Access provisioning

Implementing role-based access control (RBAC) and the principle of least privilege across your cloud services ensures users only have access to the resources they need. ​​This helps avoid unnecessary costs that arise from unapproved or accidental usage, and prevents over-provisioning and the potential waste of resources that aren’t being actively used.

Furthermore, when users know their access is monitored and provisioned based on necessity, they’re more likely to use resources responsibly and efficiently, which contributes to overall cost savings.

5. Manage cloud contracts

You should create a comprehensive inventory of all cloud services currently in use across your organization. Redundant resources is one area that presents significant cost savings — check for overlapping services that perform similar functions and assess if they can be consolidated.

It’s always worth negotiating with your cloud service providers (CSPs) too. By committing to set volumes and longer-term contracts for essential services, or using a single provider for multiple cloud products, there’s a good chance you’ll get a better rate for the resources you need. 

Of course, this can be a double-edged sword. Locking yourself into a longer contract can lead to wasted spend if your requirements diminish further down the line. This underscores the importance of accurate reporting and forecasting if you want to deliver control of cloud spending over the long term.

Maximize cloud spend management efficiencies with Vertice

Cloud spend management is often a complex and time-consuming task — but Vertice is here to help. Our Cloud Cost Optimization tool is designed to help businesses manage and reduce their AWS expenses through a combination of features:

  • Granular insights let you break down cloud costs into detailed categories, for clear understanding of where your money is going and identification of areas for potential savings.
  • Intelligent recommendations highlight underutilized resources and suggest cloud optimizations according to advanced algorithms, helping your business reduce waste and lower costs.
  • Real-time monitoring ensures that cost efficiencies are maintained over time, adapting to changing usage patterns and needs.
  • Streamlined billing makes it easier to manage your cloud expenses and avoid unexpected costs.

If you really want to make a dent in your cloud spend, why not consider leveraging our in-house expertise? Our white-glove service helps maximize contract value through personalized support and guidance. With our negotiating team at your back, you can secure the best possible pricing and terms with cloud providers. We develop tailored strategies to address the unique needs and challenges of each business, and provide ongoing support to assist with any issues and ensure continuous spend optimization. 

Still not convinced? Take a look at Encompass, a digital KYC company that faced significant challenges with rapidly escalating AWS expenses and complex cloud management. By partnering with Vertice, they were able to gain detailed cost insights, automate savings, and fine-tune resource usage — saving over $143,000 in cloud spend over the first three months, much of which was through low-effort or automated optimizations. 

If you’re ready to explore how Vertice can empower cloud spend management in your own business, simply fill in the form below to get in contact.

Prepare cloud budgets with greater predictability

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

Save up to 60% on your AWS EC2 spend

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

Fulfill your EDP commitment obligations

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

Free up valuable time while managing your cloud spend

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 ›

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Cloud spend management FAQs

Further reading

Strategic cloud spend management requires a deep understanding of cloud infrastructure and all its intricacies. We’ve got you covered with our detailed guides, covering various aspects from optimization and visibility to contract management. Check out the links below to get started.

  • Cloud optimization – Cloud optimization is closely linked with cloud spend management, and one often leads to the other. This guide details how loud optimization can save businesses money and improve performance through automation and cost monitoring tools.
  • Cloud FinOps – Discover the benefits of FinOps, a cloud financial management practice that helps businesses optimize their cloud spending by aligning cloud costs with business goals.
  • Cloud visibility – Managing cloud costs and resource allocation is an ongoing challenge. Learn how comprehensive cloud visibility empowers optimized spending, improved security, and streamlined operations across your entire stack. 
  • Multi-cloud management platforms – A multi-cloud architecture enables a host of benefits, letting you leverage the strengths of different cloud providers. While it can also be more cost-effective, it inherently increases the complexity of cloud spend management — but our guide to multi-cloud management platforms will help you stay on top.
  • Cloud providers – The benefits of cloud are abundant, but it’s important to pick the right provider for the service you need, both from an operational standpoint and a financial one. Let us walk you through the various CSPs and the different services they offer.
  • Cloud contract management – Deft management of your cloud service contracts is an integral part of managing your spend, alongside ensuring the resources you’re paying for are meeting the needs of your business.
  • Cloud migration – As part of your cloud spend management strategy, you may want to consider cloud migration, the act of swapping services from one CSP to another. Our cloud migration guide explains the potential benefits of doing so, as well as the various challenges, and breaks down the process step by step.