How to squeeze more out of your cloud spend
As a third-time founder, I know how exhilarating it is to scale a tech business. Opening in new countries and bringing new products to market is one of my favourite parts of the job, but it also brings some of the biggest challenges.
In 1999, I founded my first business ScanSafe, long before players like AWS or Google came to market with a modern cloud infrastructure service. Back then we ran our business from physical servers and, as we scaled, we felt the financial pain of managing different servers across the world. When I launched my second company, Wandera, I made sure it was cloud-native and built entirely on IaaS to help us grow more efficiently. But it was a case of new tech and the same sky-high costs. In 2021, when we sold Wandera for $400m, the cloud was one of our biggest overheads.
Cloud infrastructure may have evolved significantly since I started building SaaS businesses, but it remains a major headache for entrepreneurs. With the cost of cloud dominating news headlines, businesses are scrambling for ways to reduce volatile cloud costs. Average cloud spending has grown by an enormous 35% year on year, and as much as 500% in extreme cases.
The impact of rising cloud costs is profound for businesses of all sizes, but particularly for growing companies who regularly ship new products and features. As with employees or cost- of-goods, cloud costs tend to scale with growth. More products, more features, more development, more customers, more services: it all results in increased costs.
In a time of high inflation and tough fundraising conditions, it’s essential for business leaders to give their cloud investments the same scrutiny as other overheads like headcount, office, space, and SaaS contracts. A clear strategy for cloud cost management that balances innovation with efficiency will make all the difference for future growth.
So here are four ways to get more out of your cloud spend.
1. Start with getting visibility
CFOs I speak to are desperate to get a handle on cloud costs, but they can’t get a clear picture of what their organisation is spending. Typically this is because engineering, technology or DevOps teams are in control of cloud investments and tracking spend across multiple cloud environments is complex and time-consuming. Finance leaders should prioritise getting visibility of cloud spend by category, product and service. Cloud providers like Amazon Web Services (AWS) are not set up to enable businesses to achieve this easily, so it’s a good idea to look at a cloud cost optimisation platform that will track cloud usage and spending in real-time, as well as give recommendations on how to make efficiencies.
2. Get clued-up on cloud discount programmes
Each cloud provider comes with specific discount programs that can give administrators control of spending. With AWS, for example, that includes Reserved Instances (RIs), which can be traded to improve efficiency. There is also EDP contracting, the discount initiative that can often be complex to manage. CFOs should hire or contract experts with a deep knowledge of these kinds of programs, and an understanding of exactly how contracts, commitments and terms operate with each vendor. Optimising your RI inventory alone can save your business up to 60% in compute spend.
3. Create a shared strategy between finance and tech
Developing a robust cloud cost management program (FinOps) takes tooling, collaboration and resource. Finance and tech leaders should create a clear plan on how they will scale efficiently, negotiate with vendors, and report on progress of FinOps initiatives. With a focus on aligning cloud costs with business objectives and priorities, it can also enable your organisation to measure the value and ROI of your cloud services and make data-driven decisions based on both cost and performance metrics.
4. Make time for cloud cost optimisation
Our own research shows a quarter (25%) of tech leaders say that finance staff want to reduce cloud spending but they don’t have the tech/engineering resources to prioritise this. I know first- hand how difficult it is to find time for initiatives like cloud cost optimisation. A good approach is to make FinOps a defined part of team members’ roles, and to take advantage of new breakthroughs in cloud cost optimisation by outsourcing the more complicated and time- consuming aspects - like monitoring usage and managing vendor discount plans.
Get clarity on usage and spending, define how finance and technology teams will work together, and lean on automation to do the heavy lifting. Businesses that develop a cloud cost optimisation strategy now will be thankful in the future.
Eldar Tuvey, CEO and founder at Vertice
Eldar Tuvey is a pioneer in the world of enterprise solutions and has successfully founded multiple innovative tech businesses. Eldar co-founded internet security company ScanSafe in 1999 with his brother Roy, the first cybersecurity company to deliver web security software online. At the point of its sale to Cisco for $200M, ScanSafe was ranked by IDC as the dominant player in SaaS and screened two billion web requests daily across 100 countries for customers including GE, Shell, IKEA and Standard Chartered Bank. Eldar went on to establish Wandera, a global leader in mobile security and data management, where he led the business as CEO for almost a decade before its sale to JAMF in 2021 for $400M. In 2021, Eldar co-founded Vertice to help businesses reduce their annual software spend by 20-30%. As CEO, Eldar is responsible for scaling the business and providing strategic leadership across product, technology and marketing operations.