Common Causes of Wasted Cloud Spending

More companies than ever before are migrating to the cloud. However, not every business is finding the move a financially viable one. In 2021, it’s estimated that almost 40 percent of cloud spending was wasted. Although this wasted expenditure is considerable, much of the overspend can be traced to a few common causes. Are you one of the thousands of businesses failing to embrace cloud cost optimization? Below, we spotlight some of the most common causes of cloud overspending and how to address them.

Don’t Assume Cloud Solutions are Inexpensive

Many businesses are guilty of this preconception. For many years, cloud service providers have promoted it as an inexpensive solution for businesses. While cloud overspending isn’t something that larger enterprises need to worry too much about, the same can’t be said for smaller businesses.

If a business is using multiple cloud vendors, it can be difficult to determine overall cloud expenses. In many cases, businesses may be paying for duplicate subscriptions or redundant packages. If individual pricing is low, it may not be until a deep spending audit is carried out that these surplus subscriptions are identified.

Poor Understanding of Cloud Services

This is another area where many businesses falter. To avoid overspending in the long term, businesses must identify their cloud usage requirements from the outset. When choosing a cloud vendor and subscription package, avoid taking the easy route and throwing money at a package loaded with tools and usage capacity that your business simply doesn’t need.

Outline Cloud Usage Policy

Businesses must define a clear policy when it comes to cloud usage. Without a strategy in place, it’s easy for multiple individuals or departments to spend unnecessary expenditure on duplicate subscriptions or unnecessary vendor resources. A governing policy will ensure that cloud usage doesn’t get out of hand. Putting in financial controls associated with cloud expenditure is a good idea, especially for larger businesses. Providing your organization has the resources, it’s also a good idea to invest in a project lead who can take charge of cloud management.

Negotiate with Vendors

Even if you’re confident that you’re getting maximum value from your existing cloud service providers, you must keep an eye on contract specifics. The particulars of subscription models can change with relatively little notice. This is particularly crucial if you’re relying on services from multiple vendors. Many businesses simply allow themselves to be dictated to by vendors. Instead, take a more proactive approach when negotiating contract renewals and subscription costs. While you may not be able to prevent a price rise, you may be able to steer a negotiation so you’re ending up with more services or increased cloud storage capacity.

Final Thoughts

One of the simplest ways to manage long-term cloud spending is to choose the right vendor from the outset. Smaller businesses looking to rein in cloud expenditure will benefit from outlining usage policy and ensuring they’re only investing in the resources they actually require. Larger enterprises can take things further by installing dedicated leads to control and manage cloud resources throughout entire organizations. Another surefire way of securing long-term savings is to choose a cloud vendor that will deliver scaled resources as your business and usage requirements grow.