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2022 Report

The State Of Cloud Cost Intelligence

We surveyed over 1,000 engineering and finance professionals on the state of their cloud cost intelligence. Here’s what we found.

In its ideal form, cloud cost intelligence gives companies visibility into every penny of their cloud spend — the costs of specific products, features, and teams; the causes of sudden cost spikes; the tools to assess spend through a lens of business context.

Cloud cost intelligence turns cloud spend from a liability into an asset, from a blind spot into the fuel for better business outcomes. With responses from a roughly 50/50 split between finance and engineering professionals, we wanted to know how close they were to this ideal state.

Here’s what we found

Key Takeaways

  • Houston, we have a problem. Our first major finding was that organizations view cloud spend as a high-priority issue. Respondents said that they spend too much on the cloud and that focusing on it is more of a priority this year than last year.
  • Leaders care. If excessive cloud spend was a fringe issue in years past, it has now surged front-and-center at organizations’ highest levels. A whopping 73% of respondents said that cloud cost is either a C-suite or board-level issue.
  • Engineering ownership of cost drives better outcomes. We also asked respondents whether they have a culture of cost ownership (similar to how engineering might own security). We found that a strong cost-conscious culture correlates with better business outcomes, such as improved confidence in reporting accuracy, better visibility, and less excessive spending.
  • Finance and engineering are teaming up. Cloud cost is an issue that impacts both teams. Organizations are investing in FinOps teams and sharing the responsibility. High-performing DevOps teams are already considering cost earlier in the software lifecycle.

Related article: “The 15+ Best Cloud Cost Management Tools”

How would you summarize the state of your cloud costs?

Half Of Organizations Say Their Cloud Bill Is Too High

First, we wanted to better understand the general sentiment toward cloud cost.

Answers were consistent across finance and engineering, so unless otherwise stated, answers represent both groups.

Unsurprisingly, many professionals feel their organization’s cloud costs are too high. We found:

49% of respondents said cloud costs are higher than they should be.

Only 3 Out Of 10 Organizations Know Exactly Where Their Spend Is Going

To gauge visibility, we asked participants about how well they are able to attribute their cloud spend to different aspects of their business.

We found that for any given metric, only about a third of participants have an exact understanding of cost attribution, while the majority are either estimating or have no idea.

How well are you able to measure the cost of different aspects of your business?

And The Bigger A Company Gets, The Worse Their Visibility Becomes

When we segmented answers by company size, there was an obvious pattern.

Percentage of respondents who answered "I know exactly how much this costs" for various aspects of their business

When Segmented By Company Stage, Public Companies Fared Worse Than Venture-Backed Or Private Equity Owned Companies

Percentage of respondents who answered "I know exactly how much this costs" for various aspects of their business

Worse Yet, Low Visibility Is Disrupting Both Engineering And Finance

We asked engineers whether cloud cost was disruptive to their work. 41% said cloud cost causes disruption at least a few hours a week or more, with 11% saying it disrupted the equivalent of a full sprint.

In the last 12 months, have cloud costs disrupted your engineering objectives?

We gave them a scale from one to 10, with 10 being the worst impact. The average answer was a 6.2.

Does lack of cloud cost visibility impact your ability to do your job well?

And It Typically Takes Hours, Or More, To Investigate Cost Discrepancies

8%

A week or more

14%

Days

56%

Hours

22%

Minutes

Only 3 Out Of 10 Organizations Know Exactly Where Their Spend Is Going

We wanted to understand how accurately finance teams are able to budget their cloud spend.

We asked them how much variance they typically have and how long it takes them to investigate it.

Of course, variance isn’t always a bad thing — especially when it’s a result of company growth, but it can be an indicator of how accurately teams are forecasting their spend.

In general, finance teams are experiencing variance in their cloud costs, with the largest portion of respondents experiencing between 6% and 14%.

In an average month, how much variance is there between your forecast and actual cloud spend?
Only 13% of companies have at least 75% cloud costs allocated.

Poor Allocation Is A Problem Across The Board

To gauge visibility, we asked participants about how well they are able to attribute their cloud spend to different aspects of their business.

We found that for any given metric, only about a third of participants have an exact understanding of cost attribution, while the majority are either estimating or have no idea.

What percentage of your cloud costs are allocated today?

Engineering Cares About Cloud Cost

After analyzing the companies who have the most control and and visibility when it comes to cloud spend, one variable stood out: an engineering culture that takes ownership of cloud spend.

We first asked respondents to select whether they believe their engineering team has a culture of cost ownership. The majority of respondents said they either have a strong culture or somewhat strong culture of cost ownership.

Does your engineering team have a culture of cost ownership (similar to how engineering might own security)?

Engineering Ownership Positively Correlates With Better Understanding Of Cloud Cost

Next, to help us measure the impact of a culture of cost ownership, we compared each group’s answers to other questions.

A pattern emerged: Companies who said they had strong cultures of engineering autonomy were most likely to be spending efficiently in the cloud and the most likely to know the exact costs of different business metrics. Moreover, they correlated positively with several other business metrics: less variance and faster detection when they were trending over budget.

Correlation between engineering ownership and cost outcomes

Engineering Ownership Drives Better Outcomes For Finance

We asked finance professionals on a scale from 1-10, 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 and context to finance. Engineering ownership of cloud cost correlated positively with both confidence in reporting, as well as ability to provide data to finance.

Correlation between cost ownership culture and financial reporting outcomes

Similarly, we asked finance professionals how often they believed their engineering teams consider cloud cost. Only 39% said they consider it all the time.

However, at companies where engineers considered it frequently, finance had higher satisfaction and confidence in reporting.

How often do your engineering teams consider cloud costs?

The Good News? The Age Of FinOps Is Here

Cloud cost is a top priority — and teams are collaborating to solve it.

Is cloud cost optimization more or less of a priority this year, compared to last year?
The highest level of leadership that cares about cloud cost is

Unsurprisingly, we found that organizations view wasteful cloud spend as a high-priority issue. A majority of respondents said that they spend too much on the cloud, that reducing cloud spend is more of a priority this year than last year.

If excessive cloud spend was a fringe issue in years past, it has now surged front-and-center at organizations’ highest levels. A whopping 73% of respondents said that cloud cost is either a C-suite or board-level issue.

Engineering And Finance Have Nearly Identical Cloud Cost Priorities

Over the next 12 months, which of the following are cloud cost priorities for your business?

Engineering And Finance Are Sharing The Responsibility

Most organizations are dedicating significant resources to growing their FinOps practices. 54% have at least one full-time person dedicated to managing cloud spend. Better yet, a clear majority (65%) of companies treat managing spend as a shared priority between finance and engineering teams.

Who manages cloud cost?
The responsibility of cloud cost management sits with:

High Performing DevOps Teams Are Considering Cloud Cost

Using the same criteria as the annual State of DevOps report, we asked engineers to select where their organization stood on the DevOps maturity curve, including elite, high, medium, and low. We showed them this chart.

We found that high and elite companies were considering cost more frequently and earlier in the software development lifecycle than medium and low performers – a good signal that cost is becoming part of the fabric of DevOps.

I consider the cost of products I am working on
We think about cost in the planning, analysis, and design stage

But There’s Still A Long Way To Go

FinOps is an emerging practice that was conceived only a handful of years ago. We expect that in the future, more companies will increase their focus on strategic aspects of managing cloud spend, such as unit economics.

Through solutions like CloudZero, companies can have the best of both worlds. CloudZero’s mission is to make cost-conscious innovation a reality for all digital-native businesses.

CloudZero is the only solution that allows companies to allocate 100% of their spend in just hours, aligning everyone around the cost dimensions that matter most.

Adopting cloud cost intelligence is step one. Finding the tools to support it is step two. By providing allocation without tagging, CloudZero boosts engineering autonomy, providing the most valuable resource for companies looking to make the most of their cloud cost data.

Financial Control And Predictability In The Cloud

Eliminate wasteful spending, ship efficient code, and innovate profitably — all in one platform.