Why cloud costs keep skyrocketing – and how to take back control
A financial sinkhole without proper management, discover how strategic cloud cost control ensures efficiency without sacrificing performance.
Published on 9th January 2025
Cloud cost management is key for balancing efficiency and expenses
Economic uncertainty has forced every organization, from startups to Fortune 500 giants, to scrutinize every dollar spent. Yet cloud-based projects are non-negotiable for competitiveness. After all, standing still is the fastest way to fall behind.
The cloud starts off as flexible, scalable, and budget-friendly with its pay-per-use model. But unchecked scalability can quickly transform it into a financial black hole. As adoption grows, costs climb, often unnoticed until the bill arrives. Multi-cloud strategies, adopted by an impressive 87% of organizations according to Flexera, add another layer of complexity, scattering workloads and expenses across multiple platforms. Without clear visibility, it’s impossible to control or optimize costs effectively.
One Datadog customer was hit with a staggering $65 million cloud monitoring bill in just one quarter of 2022.It’s no surprise, then, that 82% of organizations rank cloud spend management as a top priority. Control your costs, or your costs will control you.
Full visibility into cloud usage
You can’t fix what you can’t see. The cloud’s promise of agility often hides its biggest threat: the lack of visibility. In multi-cloud environments, costs are spread across providers, making them difficult to track. Flexera reports that 87% of organizations rely on multi-cloud strategies, which means leaders need to manage a complex web of consumption patterns across applications, microservices, and individual teams.
The days of shadow IT, where departments bypassed central IT to adopt their own solutions, are fading. Limited visibility into how resources are consumed remains a massive barrier to effective management. Centralized monitoring is a necessity. Without it, you’re flying blind, unable to spot waste or identify areas for optimization.
Getting granular is key. Organizations need insights that reveal which teams are using which resources, how those resources are being consumed, and where inefficiencies are hiding. Clarity turns a tangled web of spending into actionable intelligence, helping leaders make informed decisions about resource allocation and cost optimization.
Monitoring microservices
Cloud-native applications are a huge part of digital transformation, but they come with a hidden danger. Built on microservices running in containerized environments, they abstract away physical resources. While abstraction simplifies development and scaling, it also makes costs harder to predict and control.
69% of CPU resources in container environments go unused, according to recent studies. Misconfigured environments create inefficiencies that lead to skyrocketing costs. Open-source tools like Prometheus are a great starting point for tracking usage and spend. However, as organizations scale, these tools often fall short in managing larger, more complex environments.
Third-party monitoring solutions tailored for multi-cloud and microservices provide a deeper layer of insight. The best tools dive into specifics like pods, nodes, and namespaces. More importantly, they offer actionable recommendations for right-sizing workloads, making sure resources are allocated efficiently without compromising performance.
Continuous tracking and optimization
Optimization is a continuous journey. Enterprises must develop processes to analyze and optimize cloud usage regularly. This means aligning resources with actual needs to maximize value.
The first step is identifying overprovisioned workloads. Compare allocated resources with actual usage to uncover inefficiencies. For instance, are you paying for capacity you’ll never use? Right-sizing these workloads can lead to big savings. But the work doesn’t stop there. You need a feedback loop to make sure performance metrics like SLAs are met after optimization. If performance drops, revisit your adjustments to strike the perfect balance between cost savings and functionality.
Monitoring processes should also include cost analysis by application and user. Big spenders should be identified and analyzed to determine if their resource allocation is justified. A granular approach makes sure that savings are real, measurable, and sustainable.
Understanding cloud and monitoring cost models
Transparency in pricing is one thing; understanding how those prices translate into actual costs is another. Most cloud providers do a great job of laying out their pricing structures, but knowing how often and how much services will be used is a challenge. Without this understanding, costs can spiral out of control.
Monitoring solutions can help, but they can also become a liability. As applications scale, so do the costs of monitoring them. The irony here is almost laughable: the very tools meant to control costs can end up inflating them. Case in point? That infamous $65 million Datadog bill.
In order to avoid similar pitfalls, evaluate the pricing models of both your cloud services and your monitoring solutions. The goal is to keep insights affordable and scalable, meaning that your monitoring tools provide value without becoming a financial burden.
Key takeaways
In tough economic times, every expense comes under scrutiny. But cloud costs often escape this scrutiny because they’re tied to innovation and agility. That’s a mistake. Developers focus on speed and functionality, often neglecting the financial implications of their decisions. This is where leadership must step in.
Understanding the financial impact of resource allocation means teams can make smarter decisions that balance performance and cost. The result is savings that don’t come at the expense of progress.
