5 Questions Every CFO Should Ask to Rein in Spiraling Cloud Costs

Lower costs, increased agility, and freedom from the burdens of managing on-premises infrastructure. That was the promise of the cloud. Unfortunately, that cost-saving dream has turned into a distant mirage for many. According to a 2022 survey conducted by KPMG, 66% of business executives have yet to see a reduction in the total cost of ownership of their IT systems since moving to the cloud. 

Decentralized consumption, shadow IT, complex service tiers, and the opaque and confusing billing practices of the incumbent cloud service providers have all driven up spending, leaving organizations struggling to balance the benefits of cloud agility with the need for cost control. To address these challenges, here are five questions your CFO should ask your CIO (Chief Information Officer) to ensure financial transparency and optimization for all cloud infrastructure investments. 

1. What is our cloud cost breakdown by service, department, and project?  
   The first step to controlling costs is gaining visibility into where and how your organization is currently spending money in the cloud. Understanding costs by service, department, and even down to the project level enables finance teams to identify cost centers, allocate expenses accurately, and pinpoint areas of overspending for targeted cost-optimization efforts. 

    

2. What is our cloud cost forecasting and budgeting process?  
   The answers to these questions will help you anticipate and plan your organization’s cloud expenses and ensure financial predictability and alignment with business objectives. However, accurate cloud cost forecasting presents its own set of challenges. On-demand cloud services are dynamic by their very nature, with costs fluctuating depending on your usage and changes in resources. Predicting costs is further complicated by the pricing models of Amazon, Microsoft and Google, the big three incumbent cloud providers, whose prices vary depending upon region or tier of service. But the real culprit is difficult-to-predict fees for everyday operational transactions and API requests. 
    
   To address these challenges, finance and IT teams should establish a robust cloud cost forecasting and budgeting process that incorporates historical data analysis, usage trend assessments, and the flexibility to adapt to changing circumstances. And, whenever possible, use cloud storage services, like Wasabi, that charge a flat per-terabyte rate with no fees for egress or API requests. 

   
   

3. What measures are in place to monitor and control cloud costs in real time? 
   Real-time monitoring tools and processes can help identify cost spikes and anomalies promptly. CFOs should ask about the IT team’s strategy for continuous cost control and whether automated alerts and thresholds are in place to prevent unexpected expenses. Also, don’t shy away from asking technical questions related to cost optimization, such as rightsizing instances, implementing serverless architectures, or migrating data to more cost-effective cloud object storage services. Understanding these strategies will help determine the IT team’s commitment to cost efficiency.
   
   

4. What is the plan for tracking and reducing cloud waste?  
   Cloud waste refers to resources or instances that are provisioned but not actively used. CFOs should inquire about the measures in place to identify and eliminate such waste. These unused assets not only contribute to unnecessary cloud costs, left forgotten and unattended, they also can create a security risk which could lead to greater financial loss. 

   
   

5. How much data do we have, where is it stored, and how are we optimizing storage costs?  
   To optimize cloud infrastructure costs effectively, organizations need a clear picture of their data storage landscape. This includes knowing the volume of data, its location, access patterns, and associated costs. 
   
   Cost allocation: Understanding where data is stored allows for accurate cost allocation to different departments, projects, or teams. This ensures that each entity is aware of and accountable for its storage expenses.  
   
   Optimization opportunities: Different types of data have varying requirements for access speed and cost. Ask about the strategy for classifying and storing data in appropriate storage tiers (e.g., hot, warm, archive). For example, you can ensure that high-cost storage resources are being preserved for critical data by moving infrequently accessed data to lower-cost cloud object storage services.  
   
   Compliance and security: Understanding where data is stored is critical for compliance and security considerations. Unwanted fines for security breaches or compliance infractions, or worse—being forced to pay a ransom to decrypt your data—will not help with your efforts to keep costs low and predictable. Which leads to our bonus question: 
   
   

6. Are we backing up our data in the right cloud to maximize security, accessibility, and affordability?  
   First, make sure you are backing up to the cloud. On-prem backups are a favorite target for hackers, and nothing will destroy your budget—and potentially your reputation—faster than a successful ransomware attack. Cloud storage has become the de facto standard for secure offsite backups, but not all cloud storage is created equal. Most providers offer immutable buckets and object lock to prevent hackers from deleting or encrypting your data, but only Wasabi provides an additional layer of security that prevents anyone from deleting your entire storage account. Wasabi also does not charge for egress or API requests, so you can test your backups without being hit with unpredictable additional costs.