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What Is Cloud Cost Management and Why Is It Important?

By August 1, 2023October 26th, 2023Azure, Blog, Microsoft
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In today’s digital landscape, businesses are increasingly turning to cloud computing to drive efficiency, scalability, and innovation. Embracing cloud technology comes with new challenges, however, particularly in managing and optimizing its associated expenses. Because cloud infrastructure is inherently complex, it can be difficult to track, analyze, and forecast cloud expenses. This issue is made worse by the pay-as-you-go pricing model, which the majority of providers employ, as spending can vary greatly based on the resources being used.

Fortunately, businesses can establish a framework for budgeting and shared accountability with the aid of a cloud cost management plan, ensuring that cloud resources are utilized responsibly and in accordance with proven architectural frameworks.

What Is Cloud Cost Management?

Cloud cost management refers to the process of monitoring, measuring, and controlling cloud expenses. It encompasses a range of activities aimed at establishing financial transparency, so action can be taken if the costs ever become unreasonable.

The ultimate goal of deploying cloud cost management is saving revenue. According to one survey, 67% of respondents who used a cloud financial management system claimed it contributed to revenue growth, while 31% said it helped them sustain revenue. But if your cloud costs get out of control, the impact of the cloud in driving additional success for your revenue goals can be hampered.

Why Is Cloud Cost Management Important?

Cloud cost management is crucial for businesses that rely on a pay-per-use business model. As companies grow and increase their usage of cloud services, it’s easy for expenditures to spiral out of control—just ask Adobe, which accidentally spun up an $80k/day Azure environment that went undiscovered for a week. Implementing effective cloud cost management solutions becomes essential to prevent overspending on unnecessary resources and services.

Enhancing Financial Visibility and Control

Cloud cost management provides organizations with clear visibility into their cloud spend, enabling them to understand how these expenses impact their overall budget. This visibility allows businesses to proactively control costs, gaining insights into usage patterns and identifying areas of unnecessary expenditure. By effectively managing costs, budget overruns can be prevented, and return on investment (ROI) can be optimized.

Improving Operational Efficiency and Resource Optimization

Through the monitoring and analysis of cloud usage, organizations can identify underutilized resources and optimize provisioning. This process eliminates unnecessary costs while simultaneously enhancing the performance, scalability, and overall efficiency of cloud-based applications and services.

Enabling Data-Driven Decision Making

Understanding the financial impact of different cloud solutions enables businesses to evaluate their viability, as well as the potential return that comes with implementing new services or expanding existing ones. By basing decisions on tangible data, companies ensure their cloud investments support strategic growth and align with their long-term goals.

Promoting Collaboration and Accountability

Cloud cost management fosters collaboration and accountability across teams and departments. Accurate cost allocation and visibility into cloud expenses facilitate informed discussions about budgeting, forecasting, and resource planning.

Optimizing Cloud Investments

Analyzing usage data empowers organizations to identify trends, patterns, and opportunities for optimization. This includes evaluating the performance of various cloud services. By optimizing cloud investments, businesses can maximize the value derived from their cloud resources and achieve greater efficiency.

Turn to One of the Best Microsoft Cloud Solution Providers in the Industry

If you’re ready to take control of your Microsoft Cloud Solutions, turn to PEI. An award-winning Microsoft Cloud Partner, we bring simplicity to the deployment and management of all your cloud-based solutions. To learn how we can help with cloud cost management, call 303-786-7474.

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