The High Cost of Low Cloud Cost Visibility
April 29, 2024

Bill Buckley
CloudZero

Share this

Cloud spending continues to soar. Globally, cloud users spent a mind-boggling $563.6 billion last year on public cloud services, and there's no sign of a slowdown. In fact, Gartner predicts that spending will soar to $678.8 billion this year.

This skyrocketing spending growth underscores the importance of cloud cost optimization. If done properly, organizations can transform cost data into actionable business insights and coordinates to maximize the ROI of their cloud investments.

CloudZero's State of Cloud Cost Report 2024 found that organizations are still struggling to gain control over their cloud costs and that a lack of visibility is having a significant impact. Among the key findings of the report:

Cloud costs are out of control. Most organizations say they don't have control over their cloud costs. The number of companies reporting that their costs are "way too high" rose in comparison to a similar survey conducted in 2022.

Companies lose productivity due to low visibility. Almost 90% of participants indicated that a lack of cloud cost visibility keeps them from performing their job well. That is an increased level of lost productivity compared to the previous survey.

Cloud cost: Not just for executives. In 2024, the whole leadership hierarchy is interested in cloud costs. It's no longer merely a C-suite issue but has become a company-wide focus of attention.

With engineering ownership comes cost control. The survey data indicates that when the engineering function owns cloud cost management, the result is better business outcomes, such as higher confidence in reporting accuracy. 81% of survey participants noted that when engineering has some level of ownership, their cloud costs are "about where they should be."

Engineering ownership also increases finance-engineering alignment. When engineers take part in cloud cost management, their priorities are essentially indistinguishable from those of the finance team.

The Cost of Low Visibility

It's concerning that less than 50% of organizations said their cloud costs are healthy; in fact, 58% of respondents said their costs are too high. What's more worrisome is the survey data revealing a rise in the number of organizations reporting that their costs are "way too high" — a shift from 11% in 2022 to 14% this year. Though that's not a massive increase, it does reveal an ongoing lack of control with respect to cloud costs.

When asked how effectively survey participants can allocate cloud spend to the various parts of their business, 42% responded that they can only estimate those costs. More surprising still, more than 20% of participants have little to no idea how much those various parts cost. Two-thirds of organizations can't accurately measure unit costs.

Adding insult to injury, two-thirds of organizations noted that looking into rising cloud costs interferes with both finance and engineering workflows. The survey data shows this has a greater effect on companies than in years past.

As for the engineers themselves, 66% noted that their work is disrupted to some degree by a lack of visibility into cloud costs. And 22% of those reported high levels of disruption, double the figure (11%) in 2022.

The Secret Is Engineering Engagement

High-functioning engineering teams want their work to be connected to business and user outcomes. The fact that many of them can't attribute cloud costs to business units reveals a serious problem in cloud software engineering.

Every engineering decision is a buying decision

Cloud cost optimization starts with engineers. Every engineering decision is a buying decision; whenever an engineer spins up a new cloud resource, they incur a new cost. When engineers have thorough visibility into their cloud costs, their purchasing decisions are based on reality, not guesswork — and the survey results validate this idea. Greater visibility yields greater engineering engagement, leading to better business outcomes like cost savings, maximized profits, and increased accountability.

Methodology: This report is based on a survey conducted by CloudZero of 1,000 US engineering and finance workers (50/50 split) in firms with 100 to 9,999 employees and with at least $500,000 annual total cloud spend who use either Amazon Web Services (AWS), Google Cloud Platform (GCP), or Microsoft Azure as their primary cloud service provider. The survey was carried out in January 2024.

Bill Buckley is SVP of Engineering at CloudZero
Share this

The Latest

May 28, 2024
When it comes to ensuring the effectiveness of a software application, it's paramount to ensure that the application can handle varying degrees of demand. Performance testing is a crucial aspect of the software development cycle ...
May 23, 2024

Hybrid cloud architecture is breaking the backs of network engineering and operations teams. These teams are more successful when their companies go all-in with the cloud or stay out of it entirely. When companies maintain hybrid infrastructure, with applications and data residing across data centers and public cloud services, the network team struggles. This insight emerged in the newly published 2024 edition of Enterprise Management Associates' (EMA) Network Management Megatrends research ...

May 22, 2024

As IT practitioners, we often find ourselves fighting fires rather than proactively getting ahead ... Many spend countless hours managing several tools that give them different, fractured views of their own work — which isn't an effective use of time. Balancing daily technical tasks with long-term company goals requires a three-step approach. I'll share these steps and tips for others to do the same ...

May 21, 2024

IT service outages are more than a minor inconvenience. They can cost businesses millions while simultaneously leading to customer dissatisfaction and reputational damage. Moreover, the constant pressure of dealing with fire drills and escalations day and night can take a heavy toll on ITOps teams, leading to increased stress, human error, and burnout ...

May 20, 2024

Amid economic disruption, fintech competition, and other headwinds in recent years, banks have had to quickly adjust to the demands of the market. This adaptation is often reliant on having the right technology infrastructure in place ...

May 17, 2024

In MEAN TIME TO INSIGHT Episode 6, Shamus McGillicuddy, VP of Research, Network Infrastructure and Operations, at EMA discusses network automation ...

May 16, 2024

In the ever-evolving landscape of software development and infrastructure management, observability stands as a crucial pillar. Among its fundamental components lies log collection ... However, traditional methods of log collection have faced challenges, especially in high-volume and dynamic environments. Enter eBPF, a groundbreaking technology ...

May 15, 2024

Businesses are dazzled by the promise of generative AI, as it touts the capability to increase productivity and efficiency, cut costs, and provide competitive advantages. With more and more generative AI options available today, businesses are now investigating how to convert the AI promise into profit. One way businesses are looking to do this is by using AI to improve personalized customer engagement ...

May 14, 2024

In the fast-evolving realm of cloud computing, where innovation collides with fiscal responsibility, the Flexera 2024 State of the Cloud Report illuminates the challenges and triumphs shaping the digital landscape ... At the forefront of this year's findings is the resounding chorus of organizations grappling with cloud costs ...

May 13, 2024

Government agencies are transforming to improve the digital experience for employees and citizens, allowing them to achieve key goals, including unleashing staff productivity, recruiting and retaining talent in the public sector, and delivering on the mission, according to the Global Digital Employee Experience (DEX) Survey from Riverbed ...