Challenges in Cloud Cost Optimization and how to overcome them

Challenges in Cloud Cost Optimization and how to overcome them

The cloud today offers many exciting benefits to enterprises - flexible infrastructure capacity, rapid capacity deployment, faster time to market, etc., that have reshaped the way businesses operate and innovate. Enterprises can now optimize their cloud resource consumption as per their needs, and this offers them greater value economics by converting their underutilized resources into value-generating operation expenditures.

However, this rapid adoption of cloud is not without challenges for companies. The greatest challenge today for enterprises is to manage cost overruns and unexpected cloud costs. If a McKinsey report is to be believed, more than 80% of enterprises struggle with managing cloud expenses. Hence, the true economic value of the cloud has eluded the biggest of enterprises as a result of this eternal struggle.

In this article, we discuss the top cloud cost optimization challenges that enterprises face and ways to tackle them. 

  1. Complexity of multi-cloud

Multi-cloud, characterized by the use of multiple cloud service providers, is a very popular choice with enterprises today. Despite the benefits of multi-cloud, it acts as a challenge to managing costs. As per a survey by the Everest Group, 51% grapple with managing diverse cloud platforms and hybrid infrastructure. Multi-cloud architecture adds to the complexity of a cloud system.

The pricing models and operational processes of each cloud provider are unique, thus, it becomes unimaginably challenging for enterprises to have one single approach for cloud cost optimization. Tracking costs, and controlling cloud spending thus become highly challenging with this multi-faceted cloud architecture. Other aspects that add to the complexity of the multi-cloud system are data transfer costs, storage costs on the cloud, security and compliance, etc.
Solution: This challenge can be overcome by partnering with a multi-cloud cost optimization partner like CloudKeeper, which takes on all the complexity and simplifies the cost optimization process.

Enterprises can also leverage cloud cost management platforms that provide a unified view of cloud spending across multiple cloud platforms. This can enable better cloud cost transparency and control. Cloud cost tracking, monitoring, and cloud governance can also ensure an optimal level of cost control.

  1. Evolving cloud pricing models

Cloud providers constantly update their pricing models to keep up with the ever-evolving cloud landscape. Such changes in pricing models can add to the complexity of cloud cost optimization making it difficult for enterprises to keep track of their cloud costs thus impacting the final cloud bills. In addition, if the team is not updated on the latest pricing model updates, it could miss out on potential cost savings opportunities.

Solution: The key is to keep a close eye on evolving cloud pricing models offered by leading providers. Also, a business must foster a culture of cost-awareness among the team. Dedicated resources who maintain regular communication and engagement with cloud providers to stay informed about upcoming pricing changes, negotiate favorable pricing terms, and identify opportunities for cost reduction.

  1. Manual reserved instances management

Reserved Instances(RIs) offer way more benefits for organizations with regard to cloud cost savings compared to on-demand pricing models. However, managing reserved instances is a challenge in itself and be a major roadblock to your cloud cost optimization efforts. Overcommitting and underutilizing these reserved resources leads to operational inefficacies and wastage of cloud resources, thus ultimately affecting your cloud bills. These challenges pose obstacles to cloud cost optimization, potentially resulting in missed opportunities for significant cloud cost savings.

Solution: The AI-based platform for reserved instance management automates the RI buying and selling as per infrastructure needs. Moreover, advanced tools with predictive analytics and machine learning can help organizations forecast future resource demands, thus making reserved instance management much easier. This strategic purchase and utilization of RIs can have a major impact on the cloud cost economics of the company.

  1. Lack of cloud cost visibility and culture of accountability

While we talk about tactical and strategic measures to combat rising cloud costs, one of the most important, yet ignored areas is transparency in cloud FinOps and a culture of accountability for cloud cost management in a cloud team. A crystal clear view of who is consuming what resources, i.e., cloud cost visibility, can help with effective cost allocation and cloud cost optimization efforts. A culture of accountability must be desired all the way along and make significant impacts in establishing effective cloud FinOps standards.

Solution: A culture of cloud cost accountability must be fostered, ensuring the teams understand the financial implications of their cloud cost optimization efforts. A high level of collaboration between the different teams is also critical for mitigating this challenge. Organizations must invest in a cloud cost visibility tool that helps them with real-time cloud cost monitoring and a granular view of cloud spending patterns. This further helps the cloud FinOps team to implement robust resource tagging strategies for cloud cost optimization, enabling clear identification and attribution of costs.

  1. Unusual cloud cost spikes

Cost spikes can be a major roadblock to your cloud cost optimization efforts. Such spikes are unusual in nature and untimely. Different factors can cause them including heightened demand, suboptimal resource allocation, or changes in application workloads.

Timely detection and resolution of these cost spikes is absolutely essential for achieving cloud cost optimization goals. Companies must be vigilant in monitoring cloud resource demand patterns that might cause anomalies in costs.

Solution: Resource monitoring tools and alert mechanisms are generally seen as a solution to battling this challenge of cloud cost spikes. They can detect cost anomalies in real-time and raise timely alerts to companies. Organizations can also implement AI-based predictive analytics platforms to forecast potential spikes based on historical cloud cost patterns to avert any such spikes.

  1. A gap in the latest cloud skills

One of the biggest challenges when it comes to cloud cost optimization is keeping oneself updated with the evolving cloud landscape. Cloud computing is a rapidly evolving area and it demands regular upskilling and training of the people involved in the optimization process. Any technology skill gap can impede the effective implementation of cost optimization efforts.

Solution: Companies must conduct regular training and skill development as an integral part of their cloud optimization journey. Stakeholders can avail a large number of resources, workshops, and certifications provided by cloud service providers to stay updated on the latest cloud cost optimization advancements.


Today’s highly competitive cloud landscape demands that companies adopt the latest strategies for managing their cloud costs. Businesses must be proactive in reviewing and implementing their strategies to keep up with evolving business needs and trends. By leveraging effective tools, fostering a culture of accountability and collaboration, and constantly upskilling on key cloud technologies, businesses can overcome these key cloud cost optimization challenges and unlock the full potential of the cloud.