Cloud Financial Management: 5 Practical Steps to Reduce Your Bill

With sky-high inflation and the world tiptoeing on recession grounds, 2023 has proven a difficult year for raising capital. In times of such financial uncertainty, one possible route is front of mind for most businesses: reducing costs.

42% of senior executives state that cost-cutting is a key priority for 2023. But managing cloud spend has been challenging for organizations, who have had to deal with a lack of visibility over cloud usage, complex billing, and a tendency to over-provision for years. Plus, there’s a chance that reducing your cloud bill will come at the expense of innovation or development velocity.

By approaching cloud financial management with the right tools and tactics, you will find that there’s more you can do with the cloud while paying much (up to 70 percent!) less. So where do you start? With Cloud Financial Management.

What is Cloud Financial Management?

Cloud Financial Management (CFM), sometimes called cloud cost management, optimizes a business’s financial aspects of cloud computing resource consumption. Implementing a CFM strategy entails the adoption of frameworks, as well as tools and processes, to gain visibility into cloud resource utilization and cost, eliminate waste, and maximize the return on the business investment (ROI) in cloud services and resources.

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It’s worth noting that the terms CFM and FinOps are often used interchangeably, and rightfully so. Adopting FinOps as a framework and discipline for multi-cloud financial management led even AWS to use the terms as synonyms in their publications.

Why You Need a Cloud Financial Management Strategy in 2023

Controlling cloud expenses has always been an issue. The benefits of adopting a cloud financial management strategy and framework have stayed the same over the last few years. It is still the best approach to balancing innovation, efficiency, expenses, and multi-cloud security. So why now?

Businesses of all sizes now identify cloud financial management as the top cloud challenge, surpassing even security for the first time in more than ten years. Even Gartner predicts that, through 2024, 60% of infrastructure and operations leaders will face public cloud cost overruns, negatively impacting their on-premises budgets.

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The increased attention to cloud financial management in 2023 is partly driven by inflation, fear of recession, changes in software licensing costs, FinOps skill shortages, and growing pressure to prioritize development and delivery velocity over cost management.

This seemingly dire situation creates room for optimization and investment in the overall management of the financial aspects of cloud computing. With a trusted and effective CFM strategy, your engineering teams will be free to focus on strategic cloud initiatives that drive growth and innovation while getting more bang for every buck invested in the cloud.

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Cloud Financial Management: 5 Practical Steps to Reduce Your Cloud Bill

According to the FinOps foundation, there are three iterative phases to cloud financial management — Inform, Optimize, and Operate. Regardless of the cloud financial management framework or model you choose, you can take a few actionable steps to reduce cloud expenses in your organization.

1. Improve cost visibility

Knowing where your money goes is critical to reducing spending – you can’t optimize what you can’t see. But when it comes to cloud financial management, this is simpler said than done, especially with such a broad set of innovative tools used, including containers, and serverless functions, that make it super easy for developers to make use of the cloud (while paying little attention to the resulting costs).

Identify your spending (or estimate it if you’re yet to start your cloud migration strategy), fully comprehend how services are billed, and connect cloud expenses to business outcomes. For example, you must understand workload concurrent usage, accessibility requirements, and data flow capacity planning for every project and application according to their intended business outcomes.

With an accurate overview of your cloud spend, you can employ spend monitoring and forecasting and optimize your resource allocation accounting for spend and performance.

You need to map your billing data to business units and functions with tags and labels to achieve this. If you base your cloud spend allocation on organized and uniform tags and business mappings, you enable accurate cloud chargeback and show back in your ownership and accountability efforts. With multi-vendor cloud implementation, it also helps to employ multi-cloud tools to clarify the notoriously complex cloud vendor bills and provide insight into team or project-specific cloud spend trends.

2. Automate resource allocation optimization

Manual optimization of cloud financial management is not scalable at the speed of cloud growth and change. Automating cloud spending controls with multiple vendors requires a more innovative approach that leans toward maximizing all clouds while eliminating cloud waste (idle resources).

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Cost optimization automation tools can help you analyze resource usage patterns, identify overprovisioned or underutilized resources, and rightsize them as business requirements and priorities change. To strike the right balance between performance and cost, you should continuously monitor and leverage historical data and AI/ML algorithms to help eliminate waste and reduce unnecessary costs in near-real-time.

With solutions like Control Plane, you can take resource allocation optimization one step further by employing serverless mode in which containerized applications scale automatically up and down with Capacity AI. Moreover, Control Plane allows you to repatriate your workloads, letting engineers move their workloads anywhere, from the cloud to on-prem, by “cloudifying” the data center and allowing it to bypass cloud providers.

Employ autoscaling

One of the most efficient and effective methods for resource allocation optimization for cloud financial management with cloud-native technologies (like containers) is autoscaling. This quick win in CFM is made possible by solutions like Control Plane, which uses real-time business metrics to generate optimal resources or instances.

With Control Plane, you can scale up automatically (with guardrails and accountability) or down to zero if the resource is idle or outdated. Waste is minimized, and resources always match application and user requirements for performance.

3. Enhance ownership and accountability

DevOps, as a practice, empowers engineers to manage infrastructure for their applications and makes it a breeze with YAML and IaC. While DevOps addresses performance and scalability, little attention is paid to ownership and accountability for the expenses incurred through cloud usage.

With the proper cloud cost visibility tools and processes in place, you can entrust each team within your organization with the responsibility for its cloud expenses. Engineers involved in creating and maintaining resources should be responsible for their spending on cloud computing resources as much as they are for their expenses on endpoint hardware and software licenses.

In addition, you should equip them with tools that enable and promote resource rightsizing and cost-efficient architecture planning early in your SSDLC.

4. Leverage rate optimization

Unlike resource allocation optimization, rate optimization is not about rightsizing and scaling workloads cost-effectively but reducing the rates paid on resources consumed. It starts with understanding that on-demand resources typically come at the highest cost.

Cloud service providers prioritize spending commitment, offering significant discounts like AWS Savings Plans, Google CUDs, spot instances, and other pricing models. You can get more creative with rate optimization by adopting tools like Control Plane that enable you to take advantage of all cloud service providers cost-effectively. Plus, you won’t have to compromise on performance or spend excessive time and effort maintaining that delicate balance in a dynamic multi-cloud environment.

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5. Use more vendor services and features (but avoid lock-in)

Take advantage of pricing models and vendor services (infrastructure, platform, and software) to lower cloud bills. In a multi-cloud environment, understanding and visualizing cloud expenses across vendors and alongside on-prem resources is one of the biggest challenges of cloud financial management. A fragmented view of spend with siloed dashboards and cost reposts from the individual CSPs makes it much harder to effectively and efficiently manage cloud spend.

To successfully aggregate spend data from multiple CSPs and get creative with balancing cost, performance, and enablement, you need a single centralized dev-friendly platform that provides better visibility into cloud investment and offers a broad selection of intelligent tactics for optimizing cloud usage and spending.

Slashing Cloud Costs with Control Plane

When choosing your cloud financial management stack, it’s essential to understand that visibility, ownership, accountability, rate, and resource allocation are just the beginning.

With the lines between infrastructure, platform, service, and solution blur in the age of cloud computing, your cloud financial management solutions need to provide more than just lower cloud bills. To make the most of every buck invested in the cloud, you need a unified multi-cloud platform that saves your engineers time.

Meet Control Plane, your one-stop shop platform for a vendor-agnostic unbreakable virtual cloud. Cloud consumption is elastically optimized on Control Plane to run with the exact resources required and nothing else. This lets you enjoy the benefits of serverless without rearchitecting your microservices.
Whether your app is containerized or not, whether you designed the app to run serverless or not – the platform runs your microservice with elastic scalability – from zero to any scale you specify. With billing based on millicores (one-thousandths of CPU core) and megabytes of memory used, you can rest assured that you only pay for what you use. Get started here.