2024 Report
The State Of Cloud
Cost In 2024
We surveyed 1,000 finance and engineering professionals on the state of their cloud costs in 2024. Here’s what we found …
Cloud computing continues to boom. Worldwide end-user spending on public cloud services reached a staggering $563.6 billion in 2023, and it’s not slowing down anytime soon — in fact, forecasts predict spending will soar to $678.8 billion in 2024.
Such rapid growth spotlights the importance of cloud cost optimization to help companies stay on top of rising spends. Done right, it transforms spend data into meaningful business insights and gives organizations the tools to optimize cloud infrastructure.
Our previous report in 2022 revealed that businesses wanted to prioritize managing their cloud costs and become more efficient, in light of troublingly high spends. Two years on, we’ve carried out another survey to find out if companies are on track with this goal.
Key Takeaways
- Out-of-control cloud costs. The majority of companies report not having control over their cloud costs, with a rise in the number of organizations saying their costs are “way too high.
- Low visibility is harming productivity. Nearly nine in 10 respondents said a lack of cloud cost visibility prevents them from doing their job well — indicating higher levels of disruption than in previous years.
- Cloud cost concerns go company-wide. This year, we see interest in cloud costs leveling out across the leadership hierarchy. It’s now a company-wide initiative, rather than just a C-suite issue.
- Engineering ownership equals a better understanding of cloud cost. Data points to a positive correlation between engineering ownership and better business outcomes, like greater confidence in reporting accuracy. 81% of respondents said their cloud costs are “about where they should be” when engineering has some level of ownership.
- Priorities continue to align for engineering and finance. When engineers are involved in the ownership of managing cloud costs, their priorities are nearly identical to those of finance teams.
The number of organizations reporting unhealthy cloud costs has grown since 2022
Before we dive into the details, we wanted to get a sense of how companies feel about their cloud costs overall, in comparison to 2022.
This year, less than half of companies reported healthy cloud costs, with 58% of respondents saying their costs are too high.
Most concerningly, our data shows an increase in the number of companies saying their costs are “way too high” — from 11% in 2022 to 14% in 2024. This isn’t a huge jump, but it indicates a continued lack of control over cloud costs.
Two-thirds of companies can’t accurately report unit costs
When asked how well they can attribute cloud spend to different aspects of their business (e.g., customers, products, features), 42% of respondents said they’re only able to give an estimate.
Even worse, over 20% said they have little to no idea how much different aspects of their business cost. Unit costs are a particularly bad blind spot, with two-thirds of companies unable to accurately measure them.
Good engineering organizations aim to connect their work to business and user outcomes, so this inability to attribute cloud costs to unit economics signals a huge failure in the state of cloud software engineering.
Companies of all sizes struggle to generate accurate costs
Our 2022 report revealed an obvious trend: the larger the company, the lower their cloud cost visibility.
This year, however, we found that companies of all sizes are equally struggling to generate accurate costs.
For both smaller organizations and larger ones with more employees and resources, only a third reported an exact understanding of their business expenses.
This shift aligns with what we’ve heard from practitioners: companies of all sizes have had to focus more on efficiency across their business in the past two years.
Visibility is worst for venture-backed businesses
There’s also been a shift in how company stage affects visibility.
In 2022, public companies fared worse than venture-backed or private equity-owned companies when it comes to cost attribution. But in 2024, venture-backed companies report having the least confidence in attributing cloud spend (32%).
Low visibility into what drives rising cloud costs leads to higher disruption among engineering and finance teams
Two-thirds of companies report that investigating rising cloud costs disrupts both finance and engineering workflows, with our data indicating this now has more of an impact than in previous years.
For engineers specifically, 66% report a lack of visibility into cloud costs causing some level of disruption to their work. Of these, 22% said they cause high levels of disruption (the equivalent of a full sprint), compared to just 11% in 2022.
23% of finance professionals also reported high levels of disruption, pointing to this being an equal problem for both teams.
While responsibilities for cloud costs have been shifting to engineering, software development tooling and processes have lagged behind. We’ve previously seen similar disruptions arise when things like quality assurance and security have shifted from external team responsibility to being owned more centrally by product teams.
Like those shifts, engineering practices and the tools supporting those practices will need to evolve to solve this dissonance.
Nearly nine in 10 respondents say poor visibility affects their ability to perform
Not only does low visibility cause a lot of disruption, but it also has a big impact on job performance.
A whopping 89% of respondents said that lack of cloud cost visibility has an impact on their ability to carry out their role. Just under half report a significant impact, while only 11% said it has no impact at all.
Variance between forecast and actual cloud spend has improved overall since 2022
Cloud spend variance — the amount by which actual spend differs from forecasted spend — can point to how accurately finance teams are able to budget their cloud costs.
When asked how much variance they typically have, 88% of respondents said they see significant variance (5-30%) in actual spend versus forecast. Considering the rise in companies reporting unhealthy cloud costs, it seems likely that spending is typically higher than originally forecast.
Companies have become quicker at investigating cost discrepancies — but there’s still a long way to go
Our survey results point to companies becoming quicker at investigating cost discrepancies since 2022. While in our previous report, 8% of respondents stated it took them over a week to solve these, this time 0% said it takes them this long.
But at the same time, there’s been an increase in the number of respondents who said it takes them hours, and a drop in the number who said it takes only minutes.
Overall, when asked how long it takes them to investigate cost discrepancies, the majority of people said between 1-3 hours.
Over one in five businesses now have at least 75% of cloud costs allocated
Our previous report found that just 13% of businesses had at least 75% of their cloud costs allocated. We’re pleased to say that in 2024, this has risen to 22%.
However, this also means that 78% of companies still have less than 75% of their cloud spend allocated.
Only one in four respondents have 100% cloud resource allocation. This signals an urgent need for better cloud cost optimization, since best practice calls for 100% allocation at all times.
Engineering teams have greater ownership of cloud costs in 2024
In 2024, there’s been a noticeable shift in the landscape of cloud cost ownership within companies, with engineering teams showing a stronger sense of responsibility and ownership over cloud expenditure.
The data reveals a significant uptick in the number of companies where engineering teams consistently take ownership of cloud costs, with 44% affirming that engineering always assumes this responsibility.
Nearly half also said that engineering sometimes takes ownership of cloud costs, marking a substantial increase compared to the previous report.
Overall, 91% of respondents recognize their engineering teams have some level of ownership over cloud costs, highlighting a widespread acknowledgment of the importance of aligning engineering efforts with cost efficiency in cloud operations.
Engineering ownership positively correlates with better understanding of cloud cost
Just as in our previous report, we found that a strong culture of cost ownership leads to more efficient cloud spend.
81% of respondents said their cloud costs are about where they should be when engineering has some level of ownership. On top of this, 68% can accurately align costs to business metrics at more than double the rate when engineers take ownership of costs.
Decentralizing ownership to the teams responsible for impacting the outcome has long been considered a smart business practice — but too often in the complicated world of tech, we don’t see that happen immediately.
Our findings prove the importance of ownership shifting left to drive better business outcomes.
Engineering ownership continues to drive better financial outcomes
In order to understand the impact of engineering ownership on finance, we asked finance professionals how confident they felt in the accuracy of their cloud cost reporting, as well as how confident they would feel if a major business decision was made on their cloud cost data. We also asked engineering to rate the difficulty of providing cloud cost data in business context to finance.
Once again, results show a positive correlation between engineering ownership of cloud cost and better outcomes for finance.
Fewer finance professionals believe their engineering teams consider cloud costs all the time
Despite a proven connection between engineering ownership and better financial outcomes, there’s been a downward trend in the number of finance professionals who think engineering teams always consider cloud costs.
Just 29% of respondents said they believe their engineering teams consider cloud costs “all the time,” down from 39% in 2022. This indicates there’s still a need to get engineering more involved.
At companies where engineers consider costs frequently, finance describes higher satisfaction and confidence in reporting.
Since the last report in 2022, there’s been an evolution in organizational mindset when it comes to cloud costs, with a shift toward broader engagement and accountability across leadership hierarchies.
Where previously there was a clear trend in C-suite and the board of directors bearing the load, cloud costs are now equally important to all leaders. This underscores a cultural shift towards proactive cloud cost management strategies, emphasizing tangible action over discussion at the board level.
Cloud cost priorities continue to align for engineering and finance
Cost and budget-related goals are a high priority for both engineering and finance teams, with our data revealing near-identical alignment in priorities when engineers are more involved in managing cloud costs.
Good news: dedicated FinOps teams are on the rise
The latest data reveals a clear trend: dedicated FinOps teams are on the rise.
The number of organizations with one person primarily focused on FinOps or cloud cost management has increased from 21% in 2022 to 25% in 2024. Additionally, 34% of respondents in 2024 reported having a dedicated FinOps team consisting of two or more individuals responsible for managing cloud costs, compared to 33% in 2022.
These increases may be small, but they indicate a positive trend towards a more integrated approach to cloud cost management.
The data shows that organizations are increasingly prioritizing FinOps, recognizing its significance in optimizing cloud expenditure and driving better business outcomes.
Cloud cost accountability is shifting left
The majority of companies treat managing spend as a shared priority between finance and engineering teams.
This indicates that cost accountability is continuing to shift left — which is great news, as companies who successfully shift left see greater cloud efficiency.
High and elite DevOps teams make cloud costs more of a priority
We asked engineers to select where their organization stood on the DevOps maturity curve, including elite, high, medium, and low.
We found elite and high maturity DevOps teams are considering costs more often than medium and low maturity teams, throughout the planning, analysis, and design phases.
The key takeaway? More advanced DevOps teams are shifting cloud costs left in the development cycle, treating it like a non-functional requirement.
Three in four employees fear losing their jobs if cloud costs increase
A staggering 75% of employees fear losing their jobs if cloud costs abruptly surge by 50% or more. This unease is particularly heightened among employees at larger companies, with 100% of those at organizations with over 9,000 personnel believing their positions are vulnerable.
This scenario highlights the urgent need for businesses to implement effective cloud cost management strategies, carefully balancing innovation with responsible financial stewardship. Only then can they alleviate employee concerns and ensure both business growth and a secure future for their workforce.
In conclusion, cloud cost optimization is more important than ever
Our latest report reflects both positive strides and lingering challenges in cloud cost management across organizations. Encouragingly, there’s been a notable uptick in companies allocating a significant portion of their cloud costs, signaling a growing commitment to cost optimization.
However, despite these positive trends, it’s not all good news. The majority of companies still grapple with a lack of control over their cloud costs, with a concerning increase in the number of companies deeming their costs “way too high.”
At CloudZero, we’re dedicated to changing this narrative. We empower organizations to optimize their cloud costs while driving continuous innovation.
CloudZero stands apart as the only solution to deliver 100% cost allocation in a matter of hours, offering a crystal-clear picture of every penny spent.
Forget the frustration of endless tagging — CloudZero provides allocation without the hassle, enhancing engineering autonomy and freeing up valuable resources for strategic initiatives.
Methodology
All data is taken from a survey of 1,000 U.S. engineering/finance workers (50/50 split) in firms with 100 to 9,999 employees and with at least $500,000 annual total cloud spend who use either Amazon Web Services (AWS), Google Cloud Platform (GCP) or Microsoft Azure as their primary cloud service provider.
The survey was carried out in January 2024, and all percentages have been rounded to the nearest percent.
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