Businesses are still struggling with cost overruns and inefficiencies that stem from treating cloud purely as an IT function. Cloud optimisation is as much about financial governance and operational efficiency as it is about technology, says Dirk Ras, Architect in Office of the CTO and Practice Lead: Cloud at Dariel, a leading software solutions provider.
“Cloud is elastic, but many businesses don’t treat it that way. If you don’t continuously review, adjust, and refine cloud usage as an evolving part of your business strategy, then money will be wasted. Cloud migration isn’t a silver bullet either and needs to be evaluated based on broader IT needs,” notes Ras.
The price of optimisation procrastination
The scale of the challenge is also widespread. One Gartner study found that up to 70% of cloud costs are wasted due to overprovisioning, idle resources, and inefficient usage. In 2023, another Gartner survey of 200 IT leaders revealed that 69% experienced budget overruns in their organisations’ cloud expenditures. Conversely, 31% who stayed within budget attributed their success to accurate forecasting, proactive monitoring, and effective optimisation.
Ras says one of the biggest issues around cloud optimisation is the lack of visibility and governance in cloud management. As organisations fail to track their cloud usage effectively inefficiencies and unexpected budget surprises soon follow. “Finance teams often don’t have real-time insight into cloud usage. They only get the bill at the end of the month, and by then, the damage is done. You can have a fleet of EC2 instances sitting idle and still be paying for them.”
The outlook that cloud is a static solution rather than a dynamic system, further compounds the problem. The assumption that once workloads migrate to the cloud, the optimisation process is complete can become a costly error. “Cloud environments need continuous monitoring, right-sizing, and financial oversight to stay cost-effective,” says Ras.
Similarly, businesses face the temptation to over-provision and allocate cloud resources ‘just in case’ rather than scale dynamically. Says Ras, “It’s much better to under-provision and scale up when needed than to over-provision and pay for unused capacity. A failure to implement cost-optimisation strategies, an overreliance on on-demand pricing, and not leveraging reserved instances, auto-scaling, or proper storage management, all lead to higher-than-necessary costs.”
The hidden costs of cloud usage also add to inefficiencies, particularly where data transfer is involved – an expense that many organisations overlook in their cloud strategies. “People often don’t think about how moving data between services impacts costs. If you don’t design your cloud environment with these factors in mind, you could be spending far more than necessary,” adds Ras.
Taking cloud optimisation out of the silo
For cloud optimisation efforts to really work, they need business-wide buy-in and a cross-functional approach. Ras says there needs to be an emphasis on collaboration. “Cloud isn’t just an IT concern. If finance doesn’t know what IT is provisioning, and IT doesn’t know how costs are being allocated, you end up with uncontrolled cloud spend. The key is for teams to work together and finance, operations, and IT should be aligned to ensure cloud remains efficient and cost-effective.”
To tackle these challenges, Ras recommends using cloud monitoring tools such as AWS Cost Explorer and Azure Cost Management for real-time cost visibility. Organisations should concentrate on right-sizing and auto-scaling their cloud resources so they match with actual demand. In addition, treating data governance as a cost-control strategy is essential to ensure businesses implement proper lifecycle management for their cloud storage and data usage.
Auditing the cloud
“The most important step in cloud optimisation is knowing what you need from the start. The quicker and more effectively a client can communicate what they want and what they actually need, because those aren’t always the same thing, the better the optimisation process will be. Picking the right technologies from the beginning makes a big difference,” says Ras.
When optimising an existing cloud environment, the first step is always an audit. This involves reviewing whether allocated resources match actual usage. “There’s no point in running a massive instance for a web server that only gets a couple of hits a day. Once that’s done, the different optimisation points can be tackled, whether it’s auto-scaling, instance right-sizing, or adjusting storage.”
Global spending on public cloud services is projected to reach $723 billion by 2025, up from nearly $600 billion in 2023, according to Gartner. As cloud adoption grows, so should concerns over inefficiencies and waste.
“Cloud is only as smart as the way it is managed,” says Ras. “Without a strategic approach, it’s just an expensive server rental.”
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