What is Cloud Cost Management?

What is cloud cost management? and why should you care?

Cloud infrastructure has made huge advances in the last two decades. AWS alone now offers over 200 services! With these new offerings come amazing capabilities for unlocking your development teams. But, with all these new services and capabilities comes an overhead of administration. A common thorn in the side of cloud infrastructure managers is cloud cost management.

For a growing company such as a startup, the priority is to scale your applications as quickly as possible. And cloud services provide the tools to unlock your development team and get business value into the hands of your customers fast.

What tends to fall to the wayside is proper process and governance to track and tag cloud resources . Often resulting in a large percentage of cloud resources going untagged. Now, you end up with a black hole of resources that may or may not be critical to business operations and no clear lines of ownership.

While this may not be ‘best practice’, who cares?

Well, you’ll have to care when the finance department comes along asking you hard questions. Looking for a breakdown of the cloud bill or providing accurate forecasts for the coming financial year. This is where the rapid growth plus lack of governance can come back to bite you. Having cloud cost management processes, tools, and people in place will help you to avoid this situation.

frustrated cloud manager

Understanding the Basics of Cloud Cost Management

Cloud cost management is built around some key concepts. Each with the goal of moving your organization towards a well-managed and visible cloud cost model. Cloud cost management can be broken down into the following parts:

  • Cost visibility
  • Resource accountability
  • Governance policies and permissions
  • Cost-optimizations

Cost Visibility

Before you can make any improvements to your cloud costs, you need to understand where you’re at. Finding out where your money is going is the first step. Get detailed reporting and breakdowns of all your cloud resources. Figure out who owns what (as in which team is accountable), and what resources cost what. Create the baseline of the current state and discover your starting point. This will give you the ability to see incremental improvements from your cost-optimization tactics.

Having a clear view of your current and historical usage allows you to be predictable with your cloud spending into the future as well. Essential data for every manager as the AOP planning rolls around at the end of each year in preparation for the coming FY.

Cloud cost management tools also provide the ability to set up alerts and notifications based on predetermined thresholds. Allowing those managing cloud costs to be aware of any cost anomalies and be proactive in controlling costs before they become an issue.

Resource accountability

A common challenge that arises at this first step of the process is the lack of resource tagging. Without proper tagging, you can’t figure out which team handles which resource. The killer here is that without this fundamental data, you can’t confidently turn anything off. As you may be flipping the switch of a service that is on the critical path for a core business application. And you don’t want to be the one responsible for that outage that cost the business thousands or even millions of dollars in lost revenue from downtime.

Also by having clear accountability of resources and resource groups, you can now divide the responsibility of managing cloud costs among the owners of specific areas. Reducing the burden on one single person or team to manage cloud costs for the whole organization.

Governance policies and permissions

These are the proactive steps you can take to prevent the situation of orphan resources. Implementing processes that enforce tagging whether it be through a manual process or automation (preferably) are some of the few ways to ensure that your cloud resources have clear accountability.

Policies can be enforced via tools that will automate the control of resources based on predefined parameters. Such as pausing or terminating resources when they hit thresholds, removing unused resources, and automatically right-sizing resources.


All this is great, but improved visibility and accountability aren’t going to directly translate into more efficient use of resources and/or reduced cloud costs. With this visibility comes the ability to find ways to optimize the use of resources and leverage discounts from economies of scale.

Knowing who owns what allows you to switch off and decommission any unused resources first. Also, by seeing the level of usage and cost for resources you can make use of easy wins such as cloud service provider discounts such as reserved instances, leveraging auto-scaling of instances, or even make bigger forward-thinking actions such as re-architecting your infrastructure for optimal cost and efficiency. For example, if you’re spending a lot on egress costs due to running a multi-cloud strategy, it may be time to think about consolidating to one provider.

Best Tools for managing cloud costs

Luckily there are tools that are specifically focused on helping you manage your cloud costs. While they won’t be a silver bullet to auto-magically (although they can do some pretty cool things!) fix your cloud cost management practices overnight. Allowing you to get visibility and provide cost-optimization recommendations for you to hit your cost-management goals and in some cases, automate a lot of the heavy lifting.

To learn more about some of the best in class cloud cost management tools, check out our article here ‘An Unbiased View into the Best Cloud Cost Control Tools’.

team discussing cloud costs

Why Should I Care about Cloud Cost Management?

The costs of running cloud infrastructure may seem insignificant when you first start, but as your business grows it can quickly get out of hand and become a huge financial thorn in your side. By implementing processes, tools, and getting alignment within your organization – you can get control of your cloud costs before they spiral and become a real headache.

Even if cloud costs aren’t yet an issue, putting in practices and automated processes to properly manage your cloud resources will be a worthy investment for the future. Whether it’s digging into root cause analysis or building reporting and metrics – it will be work that will pay dividends long into the future.

If you want to get your cloud costs under control and need a roadmap to get there, we’ll be more than happy to steer you in the right direction! We’ve helped clients all over North America get a crystal clear view of their current state and helped build them the right solution to operate in a highly visible, efficient, and cost-effective way!

Tony Nguyen

VP Customer Success, Marketing & Ops

Tony is focused on building the Autimo brand as the leader in Cloud Services and Education. Helping to level up each and every one in the global cloud community. He’s an AWS Certified Solutions Architect Associate (CSAA) and is focused on continuously growing his knowledge of cloud technology.

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