Public cloud can deliver significant business value across infrastructure cost savings, team productivity, service elasticity, and DevOps agility. Yet, up to 70% of organizations are regularly overshooting their cloud budgets, minimizing the gap between cloud costs and the revenue cloud investments can drive.

Cloud cost anomalies are unpredicted variations (typically increases) in cloud spending that are larger than expected based on historical patterns. Misconfiguration, unused resources, malicious activity or overambitious projects are some of the reasons for unexpected anomalies in cloud costs. Even the smallest of incidents can add up over time leading to cost overruns and bill shock.

One of the key advantages of cloud services versus on premise deployments is the wide range of purchasing options and pricing models. While it’s an attractive advantage, it can be complicated for organizations to determine the best blend of service pricing models. The ability to define the organization’s blend of purchasing strategies and display the target versus actual performance is critical for optimizing cloud cost management efforts.

Companies are investing heavily in the cloud for the operational and financial benefits. But without a robust cloud cost management strategy in place, the complexity of cloud services and billing can to overspending and unnecessary cloud waste. Being able to accurately predict future cloud spend is one way to more optimize cloud spend and inform budgets.

Cloud spend — which research shows makes up 51% of IT budgets — is a prime candidate for company cost savings initiatives with the potential to make a huge difference in gross margins. It’s also an area that has grown dramatically in the last few years due to digital transformation and a rise in cloud demand during the pandemic.

Cloud adoption has been on an upward trajectory for over a decade with no signs of slowing down. As widescale migration becomes the norm, organizations are realizing cloud financial management — also referred to as FinOps — is critical to creating long term value in the cloud. Building a culture of financial discipline requires visibility and a strategy for measuring success along the way.

Achieving cost savings is one of the main drivers for cloud adoption. But for most companies, controlling cloud spend is much more challenging than anticipated. In a recent survey, 94% of IT decision makers report they are overspending in the cloud. Our own survey on cloud costs revealed 90% of executives say better cloud cost management and cost reduction is a top priority.

Cloud services are the number one source of unexpected overspending for companies today. As a result, cloud financial management is a major focus for most organizations. But how do you track the success of cloud efficiency? Full allocation of multicloud costs is a critical component for understanding your actual cloud services usage, establishing cloud cost management ownership, and creating accurate budgets and forecasts at the line of business, project, application and even team levels.

Cloud migration efforts continue to grow today as organizations move into a post-pandemic work environment. According to McKinsey & Company, by 2024, most enterprises aspire to have $8 out of every $10 for IT hosting go toward the cloud. In a survey by Morgan Stanley, CIOs say cloud computing will see the highest rate of IT spending growth in 2022.