Managing the associated costs of cloud computing is just as critical as managing the cloud infrastructure itself. That’s where cloud cost intelligence emerges as a crucial practice. It provides the financial insights needed to transform the overwhelming costs into well-managed, strategic investments.
Cloud cost intelligence provides actionable insights into your cloud spending and offers granular visibility into its impact on business operations.
Instead of engaging in generic discussions about cost reduction, this practice turns spend analysis into actionable intelligence. It enables strategic decision-making around cost optimization (like re-architecting solutions or adjusting service tiers) based on a thorough understanding of the cost-value equation.
In this article, you’ll learn the fundamentals of cloud cost intelligence, including benefits, key components, and best practices. Read on!
What is cloud cost intelligence?
Cloud cost intelligence (CCI) is a comprehensive strategy to monitor, understand, and analyze your cloud spending across various cloud providers, such as Amazon Web Services, Azure, and Google Cloud Marketplace to make informed business decisions. Rather than merely advising on cost reduction, CCI provides the information necessary to answer critical questions about your spending, such as:
- Where’s the money going? Whether it’s servers, storage, or serverless architecture, you can see where every dollar of your cloud investment is going.
- How are the funds allocated? Break down spending by department, project, or individual resources to analyze who has been spending what.
- Who’s incurring costs? Track cost and establish accountability within your organization.
- Are there cost-effective alternatives? Discover if there’s a more wallet-friendly option for the same features and capabilities.
- What’s the ROI? Ensure each investment in the cloud is yielding a positive return.
In short, cloud cost intelligence helps you uncover the what, why, who, and where of your cloud costs. By implementing CCI, you’ll achieve predictability in spending and maintain firm financial control.
It helps you make informed decisions and drive business value. Ultimately, it’s about smart spending and maximization of your cloud investment.
And remember, CCI isn’t a one-time activity. It’s an ongoing process that ensures continuous improvement and optimization of your cloud costs.
Benefits of cloud cost intelligence
Cloud cost intelligence is key to uncovering the full potential of your cloud investment by managing cloud spending effectively. Let’s look at the benefits that CCI brings to your business.
Improved cost visibility and transparency
Cloud cost intelligence gives you a clear view of your AWS, Azure, and Google Cloud costs. This increased visibility helps finance and DevOps teams see exactly where every dollar goes, down to individual unit costs.
Data-driven decision-making for cloud resources
Leveraging cloud cost intelligence gives you deep insights into cloud resource usage and spend patterns. Having access to this information allows business leadership to make better, data-informed choices about resource allocation, forecasting, and overall cloud cost management.
With detailed analytics from cloud cost intelligence, businesses can boost operational efficiency and maximize return on cloud investments.
Cost optimization and reduced cloud waste
You’ll be able to identify and eliminate inefficiencies, leading to savings opportunities. Cloud cost intelligence helps you identify idle resources, underutilized commitment plans, outdated storage, and other cloud waste causes. Understanding and optimizing these can lead to significant savings and improve cloud cost management.
Enhanced cloud ROI and financial efficiency
Focusing on cloud cost intelligence directly impacts your return on investment (ROI) and financial efficiency. It’s about getting the most value, ensuring quality performance and outputs while maintaining or lowering costs to improve margins.
Improved budgeting and forecasting
Your Finance teams will love the predictability that comes with cloud cost intelligence. Cost forecasting and budget setting become more accurate and reliable, allowing your business to plan with confidence. It can also ensure you aren’t making risky spend growth commitments with a cloud service provider.
Governance and compliance
CCI helps ensure that your cloud infrastructure aligns with security standards, governance, and compliance regulations. Keeping costs in check also means adhering to policies and frameworks that protect your business.
Enhanced accountability
Thanks to clear insights, every team member, from Finance to Engineering, knows their impact on cloud spend. Accountability is no longer a guessing game, and FinOps teams can hold the right people accountable for their spending.
Collaborative decision-making
Leaders and teams across your organization can come together for collaborative decision-making. With everyone on the same page about costs, you’re all equipped to steer the business toward financial success.
Key components of cloud cost intelligence
There are many facets of CCI, but we’ll highlight some of the most significant below:
1. Cost allocation and tagging strategies
You need a strong cost allocation and tagging strategy to make sense of your cloud costs and enable informed decision-making. Proper tagging allows you to assign costs to specific projects, teams, and/or resources.
For instance, AWS uses allocation tags to help you organize your resources and the associated cloud spend. CCI is the foundation for tracking and controlling your usage across different cloud services and projects.
2. Cloud cost management tools and platforms
Leveraging cloud cost management tools and platforms is vital for monitoring your cloud spending. These tools use machine learning and analytics to simplify complex cost data, providing clear, actionable insights. They transform extensive cloud usage data into comprehensible and practical information for better decision-making.
3. Cost monitoring, alerts, and reporting
AWS provides Cost and Usage Reports to track your usage and costs. Both native and third-party tools can notify you of cost anomalies or unexpected spikes with anomaly detection alarms.
Image Source: AWS Cost and Usage Reports
4. Budgeting and forecasting
For financial planning, you’ll want to focus on budgeting and forecasting. This involves predicting future cloud costs and defining budgets that align with your business objectives. Tools integrated within AWS, like Budgets and Cost Explorer, enable you to set custom budgets and estimate future costs based on historical trends.
5. Cost allocation, showback, and chargeback
Cost allocation, showback, and chargeback mechanisms help you bill the correct business units within your organization for the cloud resources they consume. This encourages accountability and helps ensure departments/projects stay within budget.
Cost allocation also encourages a culture of transparency and responsibility. Tools like ProsperOps can help you with Intelligent Showback and commitment automation, helping you further track and allocate saving shares across the organization.
6. Cost visibility and reporting
Cost visibility and reporting are about understanding where your resources are being utilized, when, and by whom. It helps you understand granular cost metrics, establishing accountability throughout the organization. AWS Cost Explorer simplifies this process with detailed breakdowns. You can see the finer points of your spending and identify trends across your entire cloud environment.
Image Source: AWS Cost Explorer
7. Continuous optimization and cost-saving practices
Finally, continuous optimization and cost-saving practices are the backbone of cloud cost intelligence. They revolve around regularly reviewing and optimizing configurations — like scaling down unused resources or turning to Reserved Instances or Savings Plans for better pricing.
Effective cloud financial management practices lead to better cost predictability and long-term saving opportunities. By focusing on these components, you can save money and build a smarter, more responsive infrastructure that aligns with your company’s financial goals.
Best practices for reducing costs with Cloud Cost Intelligence
Managing your cloud spend efficiently is more than just a good idea — it’s essential if you don’t want your spending to spiral out of control. Cost optimization best practices like the ones we’ll highlight below are a necessity for handling these economic uncertainties.
Implement FinOps
FinOps, or cloud financial operations, brings financial accountability to the cloud’s variable spend model. FinOps teams can help you develop a clearer picture of your cloud spend and where to optimize.
By combining engineering expertise with financial management, you ensure your cloud investments deliver the value your business needs.
Efficiently utilize commitment plans
Take advantage of commitment plans like AWS Savings Plans, Azure Reserved Instances, or Google Cloud CUDs to avail significant discounts. By committing to a certain level of usage, you can enjoy lower prices compared to pay-as-you-go rates.
This predictability in spending aligns your usage with financial planning, helping you save on costs and avoid over-provisioning. For a hands-free approach to effective commitment management, leverage automated FinOps tools like ProsperOps.
Identify unused resources
Waste reduction is vital in cost optimization. Organizations should continuously review provisioned resources to ensure they’re not paying for what isn’t needed. This could include unused or idle virtual machines, outdated storage volumes, or redundant network equipment.
Rightsize your instances
Rightsizing includes selecting the most cost-effective resources for your workloads by assessing and adjusting to match demand. Don’t let the fear of insufficient capacity lead you to overprovision — use data and machine learning predictions to make informed rightsizing decisions.
Utilize autoscaling
Autoscaling is your friend when matching resource allocation with fluctuating demand. It’s a great way to enhance operational efficiency. Kubernetes and similar platforms offer autoscaling options that ensure you only use (and pay for) resources your applications actually require, scaling up or down as needed.
Through these approaches, you’ll optimize your cloud spend and improve your overall system performance and efficiencies.
Optimize your cloud cost intelligence with ProsperOps
ProsperOps delivers cloud savings-as-a-service. Our FinOps platform simplifies cloud cost intelligence by automating complex and time-consuming discount instrument management.
ProsperOps automatically blends discount instruments to maximize your savings while minimizing commitment risk. By removing the effort, latency, and risk associated with manually managing rigid, long-term discount instruments, we simplify saving opportunities for your team.
Saving on your cloud bill with ProsperOps requires zero changes to any of your engineering or financial processes.
See how ProsperOps can deliver seamless cloud cost intelligence tailored to your business needs — book your demo today.
