As a CFO, convincing your chief technology officer (CTO) to prioritise cloud cost optimisation is crucial for effective budget management. With cloud waste estimated at 30% of total spending (Flexera 2023), optimising costs can lead to significant savings, both in the short and longer term.
Here’s how to make cloud cost management a higher priority for your CTO:
The Cloud Cost Escalator
Without proper management and control, cloud costs can grow insidiously, typically increasing by 20% to 50% per annum. If cloud costs outpace revenue growth, the value of cloud investments diminishes. To mitigate this risk, cost savings can be achieved in four main areas:
- Preventing wastage by turning off or deleting idle or unused resources
- Leveraging cloud discounts and savings plans
- Simple resizing of cloud resources
- Complex optimisation of cloud architecture and application efficiency
A minimum of 40% of savings can come from complex optimisation, which, by its nature, is the hardest area to make progress in and requires concerted effort.
Encourage Collaboration
A strong partnership between finance and engineering teams is crucial. Organisations that integrate effective FinOps practices are more successful. FinOps is not just about identifying cost-saving opportunities; it’s about developing these opportunities to conclusion with the cloud engineering teams. Open communication and collaboration align teams towards shared financial and technical goals.
Build Skills, Not Just Tools
While cloud cost management tools provide visibility, they are only as effective as the teams using them. Companies with structured cloud training programmes reduce unnecessary cloud spend by up to 35% (Gartner 2023). Invest in training to improve cost awareness and optimise resource allocation – because a skilled team can implement cost-saving measures more effectively than any tool alone, especially over the longer term.
Present Data-Driven Recommendations
Provide your CTO with clear, actionable insights backed by cost, performance, and capacity analysis. Use real-time data to identify inefficiencies, highlight cost-saving opportunities, and justify optimisations. Visual reports and trend analysis can expose anomalies, driving informed decision-making and continuous cloud cost improvements.
Make Cost Optimisation Continuous
Cloud cost management isn’t a one-off exercise. Regularly reviewing usage and adjusting strategies can sustain long-term savings. Companies that embed cost reviews into their processes optimise cloud spending more efficiently (McKinsey 2023). Ad hoc attempts and flurries of activities are rarely successful in reducing the ongoing cost burden as cost management efforts need to be sustained.
Next Steps
Understanding the drivers of cost and continuously improving cloud costs relative to revenue is . How to do it? Foster collaboration, invest in skills, and provide data-backed recommendations, so that your CTO prioritises cloud cost efficiency, leading to smarter investments and long-term savings. How this helps you? By avoiding high-profile costs at the board level you’ll be recognised for running a tight ship.
If you’d like to discover how cloud cost optimisation can help your business, get in touch with us today.
