Cloud computing is nearly universal in business today, but with its flexibility comes an often overlooked challenge: managing cloud costs.
Despite the continued rise in cloud services and the priority placed on cost-cutting, many organizations find themselves unable to effectively reduce wasteful cloud spend. While there are many contributors to this, lack of accountability is especially harmful.
When accountability isn’t clearly defined, teams may lack ownership over cloud usage, leading to inefficiencies and unchecked cloud expenditure. Without the right structure in place, usage reports can be vague, making it difficult to trace costs back to specific departments or projects. Additionally, without visibility into cloud spending patterns, organizations struggle to identify areas of cloud waste or opportunities for optimization.
Establishing cloud cost accountability doesn’t just enhance cloud visibility — it also helps organizations optimize their cloud spending and drive greater value from their cloud investments.
This article will look at the concept of cloud cost accountability, its importance in the modern cloud environment, and strategies to implement it organization-wide.
What Is Cloud Cost Accountability?
Cloud cost accountability is the structured approach of assigning and managing cloud expenses across an organization to ensure transparency, ownership, and optimization of cloud costs. It involves clearly defining which teams, departments, or business units are responsible for specific portions of cloud usage and costs, making it easier to monitor and control spending.
The shift from on-premise to cloud computing has fundamentally changed how IT resources are procured and managed, making cloud cost accountability more critical than ever. Previously, procurement was structured and predictable, with clear cost proposals and ROI calculations before any approval. However, in the cloud era, resources can be provisioned instantly, and costs are incurred in real time with just a few clicks. This on-demand flexibility, while beneficial, introduces the risk of uncontrolled and unpredictable expenses, creating a disconnect between technology and finance teams.
Without integrating cloud cost accountability as a core part of cost management strategies, businesses will struggle to manage and optimize their cloud investments effectively.
Challenges of Cloud Cost Accountability
The challenges of operating in the cloud, especially the way its pricing and usage models can frequently change, can make it difficult to track expenses accurately. Most companies that operate in the cloud run into the following challenges as they attempt to distribute cloud cost accountability:
Lack of visibility and awareness
One of the biggest challenges in cloud cost accountability is the lack of visibility into actual cloud usage across the organization. With so many teams and departments using cloud resources all at once, it can be difficult to track and accurately attribute costs.
This lack of transparency leads to inefficient resource allocation and unexpected costs — such as one team using more resources than they’re ideally supposed to, leaving unused resources running, or opting for higher-cost models unnecessarily.
Implementing a centralized cloud cost monitoring platform with views into how resources are being provisioned can help you resolve this challenge. These platforms provide real-time visibility for quick corrective actions and informed resource allocation decisions.
Accessing cloud cost reports
Cloud billing systems can be especially complex and generate vast amounts of data. As a result, detailed cost reports are often confusing, especially for team members without the technical know-how to interpret the results.
Without the ability to access clear, actionable cost information, decision-making and cost-optimization efforts become much harder. But user-friendly dashboards and reporting tools simplify complex billing data into accessible visualizations and role-specific reports to support optimization efforts. Make sure you are leveraging FinOps automation to make the most of your Cloud Usage & Cost FinOps domain.
Complex pricing models
Cloud providers offer various pricing and discount models, such as On-Demand, Reserved Instances (RIs), and Spot Instances, for better scalability and cloud rates. The downside is that it’s difficult to determine the most cost-effective approach for your needs.
For example, Reserved Instances offer significant discounts for long-term commitments. But they also lock you into a set amount of usage for a particular resource. So, if you apply them to workloads with unpredictable or fluctuating demand, you’ll experience over-provisioning and wasted commitment spend.
Understanding and optimizing these various pricing models requires expertise and continuous monitoring so that you don’t over- or under-commit resources and only pay for what your business needs.
Lack of expertise
There is a clear shortage of skilled professionals with experience in cloud financial management. This scarcity leads to a lack of information-sharing across departments, making it harder to implement effective cost-management strategies across the organization.
By cultivating FinOps skills in-house, organizations can stay on top of trends in cloud cost management and ensure they are consistently implementing best practices. This approach allows for better cross-departmental collaboration, enhances overall cloud cost accountability, and helps businesses identify and implement cost-saving opportunities more effectively.
Lack of FinOps culture
A strong financial operations (FinOps) culture leads to better cost control and cloud spending. Without it, companies are at a greater risk of experiencing budget overruns and financial surprises.
FinOps allows for a shared understanding of the importance of cloud cost management across all levels of the organization, helping to create more effective cost accountability measures.
Who Should Be Held Accountable for Cloud Costs?
According to the FinOps framework, certain business units play particularly large roles when it comes to the shared responsibility of managing cloud costs.
- Engineers and operations teams: These teams are at the forefront of cloud resource utilization. Engineers and operations personnel are responsible for designing, implementing, and maintaining cloud-based solutions.
- Finance teams: Finance professionals typically own budgeting, forecasting, and reporting on cloud expenses. They work closely with the technical teams to understand cloud usage patterns, develop strategies for maximizing their company’s cost optimization strategies, and ensure departments adhere to their allocated budgets.
- Procurement teams: In the cloud era, procurement teams have adapted to a more dynamic purchasing model. They’re the experts on cloud pricing models, negotiating contracts with cloud providers to get the best value for cloud investments, big or small.
- Leadership/executives: C-level executives, particularly CTOs and CFOs, set the overall strategy for cloud adoption and cost management. They aim to create and more importantly, foster a company-wide culture of cost awareness and accountability.
While these teams play an outsized role, cloud cost accountability is ultimately everyone’s responsibility in a true FinOps culture. Each department, team, and individual should understand the financial impact of their cloud purchases and apply best practices to keep costs down without sacrificing performance or innovation.
Strategies for Improving Cloud Cost Accountability Within an Organization
To effectively manage and optimize cloud costs, organizations need to implement a series of strategies that promote all of the themes we’ve touched on so far: accountability, transparency, and efficiency.
These strategies require organization-wide buy-in, but without them, your cloud cost accountability efforts and initiatives will fall flat.
Adopt the FinOps culture
Implementing a FinOps culture is a major step in fostering collaboration between finance, operations, and engineering teams. By encouraging and enabling transparency across departments, organizations can make much more informed decisions about resource allocation and cost management.
A mature FinOps culture ensures that everyone understands the importance of cost-efficiency in the cloud and is accountable for their usage and purchasing decisions.
Make cloud reports widely accessible
Making cloud usage and cost reports easily accessible creates more visibility. This leads to more informed resource allocation, accountability, and departmental collaboration on cost-saving initiatives.
By democratizing access to cloud data, organizations empower employees at all levels to contribute to cost optimization efforts, leading to better cloud management.
Use cost allocation and tagging
A standardized cloud cost allocation and tagging strategy allows for better tracking of cloud spending. Tagging resources with relevant metadata (such as cost category, project, department, or environment) enables organizations to attribute costs to the appropriate teams or projects and identify opportunities for further optimization. Allocation is the foundation of cost accountability as it allows organizations to understand the what, why, where, and by whom of the cloud costs.
Implement cost optimization strategies
To drive accountability and efficiency, organizations must implement cost optimization strategies that align with their FinOps practices. These include:
- Eliminating idle resources: Regularly identify and shut down unused or underutilized resources to prevent unnecessary costs and hold teams responsible for efficient resource management.
- Right-sizing instances: Ensure that instances are appropriately sized for their workloads to avoid over-provisioning.
- Utilizing discount instruments: Take advantage of discounted pricing for committed resource usage, such as Reserved Instances in AWS, ensures that teams are accountable for planning and managing resources efficiently.
For more detailed AWS cost optimization strategies, check out our guide on AWS cost optimization best practices.
Leverage a cloud cost management tool
Cloud cost management platforms like ProsperOps automate the ongoing process of optimizing cloud resources with real-time needs. These tools provide real-time visibility into cloud spending, enabling organizations to track, manage, and optimize their cloud usage effectively. By integrating a cost management platform, teams can gain insights into spending patterns, identify cost anomalies, and receive actionable recommendations for optimization.
Educate teams on cloud cost management
Investing in education and training can go a long way toward promoting cost awareness throughout an organization. Training on optimization techniques and best practices is a great place to start.
The FinOps Foundation offers several FinOps certifications, such as the FinOps Certified Practitioner. These courses provide comprehensive training on cloud financial management principles and practices, so you can bring that expertise in-house.
When you empower your team members with cloud cost intelligence tools and knowledge, they understand the impact of their decisions and can be more mindful in their day-to-day cloud utilization.
Motivate teams with rewards
To incentivize an active, company-wide effort to generate cloud cost savings, create a rewards program that recognizes and rewards employees who make the most significant contributions toward cost optimization efforts. This could include gift cards, bonuses, or other incentives, depending on what your teams value.
Use industrial and internal benchmarking
Clear performance metrics, shared across teams, foster healthy competition that drives innovation in cost-saving strategies. For example, comparing cloud spend efficiency between departments or against industry standards can motivate team members to find new ways to optimize their cloud usage.
This gamified approach not only encourages individual accountability but also promotes collaboration as teams share successful optimization techniques. Motivating team members to compete with each other and find new ways to optimize cloud costs can lead to better results overall.
Explore the most crucial benchmarking KPI for FinOps teams — Effective Savings Rate.
Ace Your Cloud Cost Management With ProsperOps
A true FinOps culture distributes the responsibility of managing cloud costs to everyone within the organization. Cost accountability strategies like education, benchmarking, and encouraging collaboration help to foster this culture.
As a result, it becomes easier to optimize your cloud spending and drive greater value from your cloud investments. While the technical aspect of managing cloud costs can still be complex and time-consuming, ProsperOps simplifies this process by autonomously optimizing discount instruments.
ProsperOps runs in the background 24/7 to maximize savings and minimize commitment risk without disrupting your existing infrastructure or workflows — no manual oversight required.
The platform delivers additional savings rates, provides comprehensive financial reporting tools, and operates on a pay-for-performance model, offering a risk-free solution to streamline your cloud cost optimization.
Schedule a demo with ProsperOps today to see how we can enhance your cloud cost-efficiency and accountability.