According to Gartner, by 2025, more than 50% of IT spending in key market segments will transition to the cloud, surpassing traditional IT solutions. This shift is driven by the increasing adoption of cloud technologies across various industries. 

In 2025, 51% of IT spending in application software, infrastructure software, business process services and system infrastructure will be directed to the public cloud, compared to 41% in 2022. 

To navigate this transformation and optimize cloud spending, businesses need robust cloud cost management strategies.

This blog post talks about: 

• The benefits of cloud cost management
• How to build a cloud cost management strategy
• The 9 best tools for cloud cost management
• Best practices in cloud cost optimization

Cloud cost management 

Cloud cost management is important for businesses employing a multi-cloud strategy.. This approach brings flexibility and advantages but also introduces challenges in effectively managing cloud costs. With diverse cloud environments and intricate pricing models, businesses need to optimize expenditure and resource allocation. 

Cloud cost management addresses these complexities by providing detailed visibility into cloud expenses, empowering data-driven decision-making and cultivating financial responsibility within the organization.

What is cloud cost management software?

Cloud cost management software gives businesses visibility into their cloud usage, cost analytics and optimization capabilities. These solutions seamlessly integrate with various cloud platforms, consolidating billing data and offering detailed insights to help make informed decision-making regarding cloud investments.

Cloud cost management software helps in:

• Facilitating budgeting and forecasting processes
• Providing real-time data and cost projections
• Empowering businesses to allocate resources effectively and align cloud spending with strategic objectives and financial targets.

Furthermore, these software solutions enable high-growth businesses to: 

• Establish cost allocation methodologies
• Track departmental or project-specific expenses  
• Ensure transparency and accountability across teams and stakeholders.

Benefits of cloud cost management

Here are the benefits of using a cloud cost management platform and how it can enhance your organization's approach to managing cloud expenses

1. Cost savings

Cloud cost management platforms enable organizations to identify areas of wasteful spending and implement optimization strategies, resulting in significant cost savings. 

By closely monitoring cloud usage and expenses, businesses can identify inefficient resource allocation, underutilized services or unnecessary subscriptions and take corrective actions to optimize costs.

2. Enhanced visibility

Cloud spend management tools offer businesses comprehensive visibility into cloud usage and associated costs. With these tools, companies can determine how to allocate resources most efficiently by gaining insights into which services or applications consume the most resources and drive costs. 

This clear understanding of usage patterns helps organizations to make informed decisions about scaling resources and optimizing spending.

3. Improved forecasting

Accurate cost analysis and forecasting help organizations anticipate future cloud expenses, enabling better budgeting and financial planning. 

Cloud cost management platforms provide organizations with the data and insights necessary to project future costs.

4. Optimized resource allocation

Businesses can optimize their resource allocation by identifying opportunities through cloud cost management software to rightsize distribution, leverage automation and implement optimization techniques. 

5. Proactive cost control

By implementing cost allocation methodologies and tracking expenses by department or project, businesses can ensure transparency, accountability and efficient cost management. Establishing approval workflows can further enhance these aspects across teams and stakeholders.

Building a cloud cost management strategy

Here are the steps to consider when creating an effective cloud cost management strategy:

1. Set clear objectives

Define specific cost management goals aligned with overall business objectives. 

Whether it's reducing costs by a certain percentage, optimizing resource utilization or improving budget predictability, clearly articulate your objectives to guide your cost management strategy.

2. Monitor and analyze 

Continuously monitor and analyze your cloud usage and spending patterns. 

Leverage some of the best cloud cost management tools and analytics to gain insights into cost drivers, identify trends and uncover areas for optimization. Regularly review cost reports and performance metrics to make data-driven decisions.

3. Rightsizing resources

Optimize your cloud resources by rightsizing instances, eliminating idle resources and leveraging auto-scaling capabilities. 

Evaluate your workload requirements and choose the appropriate instance types and sizes to ensure optimal performance and cost efficiency. Regularly assess resource utilization and adjust capacity as needed.

4. Utilize cost allocation tags 

Implement proper tagging strategies to accurately allocate costs to different departments, projects or teams. 

By assigning cost allocation tags, you can track and report costs at a granular level, enabling better accountability, resource attribution and cost control. This visibility helps identify areas of high expenditure and facilitates informed decision-making.

5. Educate and engage teams

Foster a cost-conscious culture within your organization by educating employees about the impact of their actions on cloud costs. 

Encourage them to adopt cost optimization best practices, such as shutting down unused resources, selecting cost-effective service options and optimizing data transfer. 

6. Continuous improvement

Cloud cost management is an ongoing process. Regularly reassess your cost management strategy, evaluate its effectiveness and make necessary adjustments. 

Stay updated on the latest cloud cost management practices, tools and trends to maximize your cost-saving potential.

8 best cloud cost management tools in 2023 

Discover the top 8 cloud cost management tools for controlling expenses and maximizing ROI:

1. CloudZero

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CloudZero is a cloud cost intelligence platform that provides valuable context for your cloud and software spend. It aligns engineering, infrastructure and finance teams around key metrics like cost per product feature, customer and development team. 

With CloudZero, you can make strategic decisions, improve unit economics and optimize spending. Trusted by leading cloud-driven companies like Rapid7 and Malwarebytes, CloudZero supports organizations of all sizes on their journey towards cloud cost maturity.

Key features 

• Granular cost visibility with detailed breakdowns by team, project and service
• Real-time alerts and notifications for cost anomalies
• Predictive analytics for forecasting future cloud spending
• Build fast with cost guardrails and ensure cost efficiency while developing applications
  

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Pricing 

CloudZero offers a steady and predictable tiered pricing model. Contact the sales team for a quote.

2. Zylo

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Zylo is a SaaS management solution used by leading organizations like Adobe, Atlassian, Slack and Salesforce. It provides insights and automated workflows for monitoring SaaS spend and usage. 

With its data management capabilities and cost-saving features, Zylo helps IT and finance teams effectively manage their SaaS portfolios without the need for additional resources.

Key features 

• Usage analytics and insights to identify unused or redundant subscriptions
• Cost allocation and chargeback capabilities for accurate cost tracking
• Compare your portfolio, licenses and pricing against industry benchmarks
• Uncover shadow IT and maintain governance with an approved application catalog

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Pricing

Contact the sales team for a quote.

3. AWS Cost Explorer

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AWS Cost Explorer, offered by Amazon Web Services (AWS), provides a comprehensive visualization of AWS usage and billing information by service. It enables users to track and manage expenses through detailed reports on cost, usage and Reserved Instances (RI). 

With Cost Explorer, users can access up to 13 months of historical data and forecast their spending for the next three months. It helps identify trends and offers insights into costs over a 12-month period. 

Upon signup, users receive data on costs for the past three months, the current month and a projected forecast for the next three months, with data updates occurring approximately every 24 hours.

Key features 

• Enhanced data filtering and grouping capabilities for better data analysis
• Programmatic access to data through the powerful ad hoc analytics engine behind cost explorer
• Advanced usage and cost forecasting using machine learning and rule-based models
• Segmentation of data based on charge types like reserved instance (RI) usage or on-demand usage
• Access to AWS RI purchase recommendations for optimal cost savings
• Availability of EC2 RI purchase recommendations through the Cost Explorer API

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Pricing 

Using the free version of AWS Cost Explorer, users can take advantage of the following features:

• Access to detailed cost and usage data with hourly and resource level granularity
• Hourly granularity data is available for the previous 14 days, specifically for EC2 instances
• The API usage cost is $0.01 per 1,000 UsageRecords per month
• Enjoy the use of cost explorer, savings plans utilization and savings plans coverage reports without incurring additional charges
• The cost remains consistent regardless of the number of reports utilized with hourly granularity

For more detailed information on the quote, contact the sales team.

4. Azure Cost Management

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Azure Cost Management is a multi-cloud cost management solution that optimizes the utilization and management of Azure and various other cloud resources. It provides effective tracking of cloud usage and expenses across Azure services and popular cloud providers such as AWS and Google.

Key features 

• Track Azure resource costs across multiple subscriptions for better cost management
• Set up alerts for budget overruns at different levels to stay informed
• Optimize costs by scheduling the start and stop of Azure resources as needed
• Offers insights into spending patterns through cost trend dashboards for better visualization
• Recommendations for rightsizing and optimizing Azure virtual machines (VM)

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Pricing 

With Azure's free services, you can explore the full potential of the platform without worrying about costs such as:

• Access to popular services such as Azure VMs, Azure SQL database and Azure blob storage for the first 12 months
• When you create your Azure free account, you receive two additional services at no charge for 12 months: Azure Files and Azure Media Services, including live and on-demand streaming
• Additional use of over 55 services such as – Azure Cosmos DB, Azure App Service, Azure Functions, and Azure Event Grid, without any cost after the initial 12 months

You can easily explore the possibilities with Azure's complimentary offerings and discover the potential without the concern of expenses.

For more information, contact the sales team.

5. Densify

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Densify deals with cloud and container optimization for Cloud Ops professionals facing the challenge of balancing application performance with cost considerations. The risk of mismatched cloud resources and application demands can result in excessive spending. 

Densify stands out as the sole solution offering optimization-as-code and utilizing machine learning to empower applications to autonomously optimize their resource usage round the clock. You can achieve operational excellence in cloud management, mitigating risk and enhancing application performance.

Key features

• Machine learning-based optimization for cloud resource usage
• Automated cost optimization by rightsizing instances
• Continuous analysis and recommendations for performance and cost improvements
• Integration with management and provisioning systems

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Pricing 

Contact the sales team for a quote.

6. Harness

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Harness Cloud Cost Management empowers FinOps, CloudOps and engineering teams with the necessary features and automation to effectively manage cloud spend. 

Gain easy-to-understand insights into resource utilization, cost perspectives and workload details aligned with your business context. With Harness, your teams receive timely and customized information, enabling them to make informed decisions. 

Harness offers intelligent cloud cost management, ensuring transparency across engineering and finance. Leverage robust business intelligence, Intelligent Cloud AutoStopping and machine learning-based recommendations to reduce wasted cloud costs by up to 75%.

Key features 

• Proactively detects spend anomalies and provides alert
• You can set a threshold on spend to avoid over and surprise spends
• Integration with CI/CD pipelines for automated deployment and scaling

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Pricing 

• Free Forever: Deploy up to 5 services, build CD pipelines and leverage enterprise-grade GitOps. No credit card required
• Standard: $100 per service/month. Deploy up to 100 services, enjoy enterprise-grade GitOps, external integrations, SLA guarantee and Harness Standard Support
• Enterprise Custom: Tailored pricing. Deploy unlimited services, enterprise-grade GitOps, automatic verification and rollbacks, external integrations, SLA guarantee, Harness Standard Support, enterprise security, policy-based governance, custom dashboards and pipeline templatization. Contact sales for a personalized quote

7. Spot by NetApp

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Spot by NetApp enables cloud operations teams to achieve scalability, performance and security for cloud infrastructure and applications at the lowest possible cost. 

With continuous automation, optimization and deep visibility, thousands of customers, from startups to global enterprises, rely on Spot solutions to unlock the full value of the cloud.

Key features

• Automated workload placement for cost optimization across different cloud providers
• Utilization of spot instances and reserved capacity for cost savings
• Monitoring and alerts for managing cloud spending and performance

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Pricing 

• Free: Get started with Spot at no cost. This option allows you to try out the platform without any financial commitment.
• Pay-as-you-go: You only pay based on the savings you realize. There are no annual commitments and the cost is calculated as a percentage of the savings achieved.
• Subscription: The subscription plan offers greater discounts, priority support and a predictable billing structure. The pricing for this option is negotiated based on your usage and the savings you can achieve.

8. Flexera One

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Flexera One is a SaaS-based IT management solution designed for organizations with complex hybrid environments. It offers IT visibility through discovery, normalization and unified data visualization. 

With comprehensive IT asset management, including software, hardware and SaaS management, organizations can optimize license consumption, make informed hardware decisions and optimize SaaS usage. 

Flexera One also provides cloud cost optimization capabilities, enabling visibility into cloud usage and costs, governance automation and actionable intelligence for cloud migration and modernization. It's the solution that empowers businesses to make data-driven decisions and achieve IT efficiency.

Key features

• Hybrid cloud cost optimization and management
• Automated governance and policy enforcement for cost control
• Visualize and allocate cloud usage, optimize costs and efficiently manage hybrid IT estate
• Navigate the cloud confidently with actionable spend recommendations and intelligence for successful cloud migration
• Rightsizing recommendations and cost-saving strategies for cloud resources

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Best practices for cost optimization

With organizations grappling with balancing performance and budget constraints, effective cloud cost management has emerged as a crucial need. To maximize cost savings and optimize cloud spending, consider implementing these best practices:

1. Continuous monitoring

Regularly monitor and review your cloud costs to identify opportunities for optimization. 

Leverage the best cloud cost management tools to track spending, analyze cost patterns and identify areas of inefficiency or overspending. 

Stay vigilant and proactive in managing your cloud costs.

2. Auto-scaling

Take advantage of auto-scaling capabilities offered by cloud providers. 

Automatically adjust resources based on demand to ensure efficient resource utilization. 

Scale up during peak periods to meet increased demand and scale down during periods of low activity to avoid unnecessary costs.

3. Reserved instances

Utilize reserved instances or savings plans offered by cloud providers. These options allow you to commit to a specific usage level over a period of time in exchange for lower pricing. 

Reserved instances are ideal for predictable workloads, providing cost savings compared to on-demand instances.

4. Usage analytics

Dive into usage analytics to identify idle or underutilized resources that can be eliminated or downsized. 

Analyze usage patterns and trends to determine if certain resources are consistently underutilized or if there are opportunities for consolidation. 

By right-sizing your resources, you can optimize costs without sacrificing performance.

5. Cost governance

Establish clear cost governance policies, permissions and approval processes to govern cloud spending across the organization. 

Define spending limits, create role-based access controls and implement approval workflows to ensure that cloud resources are allocated and used efficiently. 

Regularly review and update these policies as your business needs evolve.

6. Cloud cost awareness and training

Foster a culture of cloud cost awareness among your teams. 

Educate employees on the impact of their actions on cloud costs and provide training on cost optimization best practices. 

Encourage cost-conscious decision-making and empower employees to actively participate in optimizing cloud spending.

How does Spendflo save for you

Spendflo helps businesses negotiate better pricing during vendor discussions, maximizing cost savings. With its centralized platform, organizations gain comprehensive control over SaaS purchases, spending and compliance, streamlining operations and optimizing resource allocation.

Streamlining the approval process is a top priority; Spendflo simplifies workflows with rule-based processes across multiple channels, including seamless Slack integration. Customized approval rules based on spending thresholds, project requirements or stakeholders ensure transparency and accountability.

Thus, you maximize the potential of cloud cost optimization and drive unparalleled financial efficiency. 

Take advantage of Spendflo's expertise and unified platform for SaaS buying and optimization to save up to 30% on your SaaS stack. 

Get a free savings analysis with us today to maximize your cloud cost management results.

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