How to address the challenges of managing cloud service costs?

Managing cloud service costs can be a major headache for many. Recently, we’ve seen several news stories where organizations’ transitions to the cloud have stumbled due to high costs, or even reverted back to their old data centers when the cloud didn’t deliver the expected benefits. The media often delights in these failures, highlighting how the cloud was not the universal solution it was initially thought to be. However, the issue is rarely with the cloud itself.

Upon closer examination of the underlying reasons, it can be determined that the problems often stem from organizations not knowing how to do things correctly. There may be fear of necessary architectural changes or a lack of understanding about who needs to be aware of the costs incurred by using services. Generally, the issues are related either to challenges with cloud architecture or difficulties in tracking and optimizing costs. These two problems, individually or together, can lead to runaway cloud service costs. In this article, I will delve into the issues of cost tracking.

In managing cloud costs, it’s easy to either overcomplicate things or not address them at all. Some companies meticulously refine various FinOps intricacies and pile up a vast amount of organizational complexity around what I see as a relatively straightforward issue, which often doesn’t lead to the best outcome. Alternatively, there is the option of letting "someone else" handle the costs.

So how can these cost management issues be resolved?

I believe that various FinOps structures have their time and place, but transparency is key. Everyone involved in building and utilizing the cloud—such as architects, developers, project managers, and business leaders—should be aware of the costs their solutions incur. This helps them make cost-effective choices and optimize resource usage. Instead of focusing solely on costs and resources by just a part of the organization, it’s crucial that the entire team understands the cost structure of cloud services and participates in managing them.

Increasing transparency in cost management helps organizations identify problem areas and find the best solutions. This, in turn, helps avoid costly mistakes and ensures better efficiency in using cloud services.

One way to promote transparency is by using tools and solutions that provide a clear view of cloud service costs and resource usage. This was the starting point for developing Spotter—a service that offers real-time insights into cloud service costs, a three-month forecast, and helps identify areas with potential for savings and efficiency improvements.

With Spotter, organizations can track cloud service costs on a project basis and even down to individual developers. This helps architects, developers, and other team members understand how their solutions impact costs and encourages them to make more cost-effective choices.

Additionally, Spotter can help organizations set cost budgets for different projects and teams, which increases accountability and encourages teams to stay within budget. This helps organizations avoid unexpected cost overruns and keep cloud service costs under control.

The original text was written 28.4.2023, this is updated version