Cloud cost management: Challenges and best practices

This is where cloud cost management becomes essential — ensuring cloud cost visibility and accountability. Informed by Financial Operations (FinOps) principles it helps ensure that resources are used efficiently and that spending is aligned with business outcomes.

At the same time, billing structures have become more complex. With a wide range of services, regions, pricing models, and usage patterns, predicting costs is no longer straightforward. While the pay-as-you-go model provides flexibility, it often results in fluctuating and unexpected bills.

In response, organisations need structured, collaborative practices that provide visibility, enforce accountability, and support ongoing optimisation across their cloud environments.

What are the key cloud cost management challenges?

Managing cloud spend is a shared responsibility across engineering, finance, and product teams. As cloud usage grows, so do the challenges. Below are some of the most common pain points organisations face.

• Lack of visibility into cloud spend: Cloud bills are notoriously complex. A single invoice from Amazon Web Services (AWS) or Azure may contain thousands of line items, making it difficult to understand who is spending what — and why.
  Without consistent tagging or cost allocation, it becomes nearly impossible to trace spend back to specific applications, teams, or products. This lack of visibility hinders accountability and introduces blind spots into business decision-making.
  FinOps best practice is to implement strong cost allocation models, allowing teams to clearly link spending to business outcomes.
• Unpredictable and variable costs: Unlike on-premises infrastructure, where costs are largely fixed, cloud spend fluctuates constantly. Traffic spikes, seasonal demand, or ad-hoc testing can all drive sudden increases in cost. This variability makes cloud forecasting difficult, especially when workloads auto-scale or when new services are adopted quickly. FinOps encourages a shift away from rigid annual budgets and towards continuous forecasting, supported by real-time spend tracking.
• Overprovisioning and idle resources: Overprovisioning is a common source of cloud waste. Many teams allocate resources “just in case,” leading to unnecessary costs. Typical examples include oversized virtual machines, unused storage volumes, or non-production environments left running overnight. These unused or underutilised resources drive up costs without delivering value. FinOps defines optimisation across three areas:
  • Usage – how much we consume
  • Rate – the price we pay for it
  • Efficiency – how well the solution is architected

Overprovisioning falls under usage inefficiency and is one of the quickest ways to drain a cloud budget.

• Difficulty allocating costs across teams and projects: In shared environments, cost attribution becomes difficult. Resources like Kubernetes clusters, shared databases, or networking services are often used by multiple teams. Splitting these costs fairly across teams or projects is complex but essential.Without proper allocation, finance teams can't measure key metrics like cost per customer or cost per transaction. FinOps practices such as showback (reporting usage without charging) and chargeback (billing based on actual usage) create greater accountability and transparency.

• Lack of FinOps expertise: Many organisations lack the FinOps expertise required to manage cloud cost effectively. It’s not just about finance or engineering — it requires a mix of technical know-how, financial analysis, and communication skills. You need people who can interpret cloud bills, work closely with engineers, and align spend with business goals. But many organisations lack this talent mix. The FinOps Foundation highlights that mature cost management requires cross-functional collaboration between engineering, finance, and business teams.
• Budgeting and forecasting challenges: Traditional budgeting models don't work well in the cloud. Cloud pricing includes on-demand rates, reserved instances, and savings plans, all of which create variability. Workloads that scale up and down make it difficult to predict monthly or quarterly spend. Finance teams used to fixed budgets often struggle with this level of unpredictability. FinOps promotes iterative forecasting, where teams review usage trends regularly and adjust budgets accordingly.
• Complex pricing models: Every cloud service has its own pricing model — whether that’s per request, per gigabyte stored, per vCPU hour, or per million messages. Add in savings plans, spot instances, and reserved commitments, and the pricing landscape gets even harder to navigate. When teams don’t fully understand these pricing levers, they miss out on opportunities to optimise their rates.
• Multi-cloud, hybrid cloud, and SaaS complexity: Most organisations now operate across multiple environments — from AWS and Azure to Google Cloud Platform (GCP) and a wide array of Software as a Service (SaaS) platforms. Each comes with its own billing format and terminology. Consolidating this data into a single view is challenging. And without that unified perspective, leaders struggle to compare costs or identify cross-environment optimisation opportunities. Mature FinOps practices aim to provide a single pane of glass for all cloud spend.
• Balancing cost with scale, performance, and security: Cost management isn’t about always picking the cheapest option. Teams must weigh financial efficiency against performance, scalability, and security. For example, using the lowest-cost instance types might impact reliability. Meanwhile, high-performance storage can improve user experience — but at a higher price. FinOps teams often help facilitate these trade-offs, ensuring decisions are grounded in business value, not just budget.

Cloud cost optimisation best practices for visibility and control

Effective cloud cost management is about more than just reducing spend. It requires cross-functional collaboration, clear governance, and ongoing optimisation. Below are best practices to help organisations build a mature and efficient cloud cost strategy.

Establish a cloud governance and forecasting framework

• Define clear policies, budgets, and accountability structures to manage cloud spending across teams.
• Governance ensures consistent tagging, cost allocation, and adherence to approval workflows.
• Strengthen governance with forecasting and anomaly detection tools such as AWS Cost Anomaly Detection (CAD), Azure Cost Management, and GCP CAD.
• These tools help identify unexpected spend and prevent overspending before it occurs.

Adopt FinOps practices for shared accountability

• Build a FinOps operating model where engineering, finance, and business teams jointly own cloud cost decisions.
• Implement showback or chargeback mechanisms to allocate costs fairly across departments or teams.
• Promote a cultural shift where cloud spend is seen not as an IT expense, but as a business investment that should drive outcomes.

Automate shutdown of idle and non-production resources

• Test, staging, and development environments are often left running outside working hours, resulting in unnecessary costs.
• This is a critical area for cloud automation, helping ensure that costs are only incurred when necessary.
• Use cloud-native tools such as AWS Instance Scheduler, Azure Automation, or GCP Cloud Scheduler to implement these automation policies.

Rightsize resources and use flexible pricing models

• Overprovisioned and idle resources are a common cause of unnecessary cloud spend.
• Rightsizing helps ensure workloads are matched to the correct capacity, improving efficiency and cost-effectiveness.
• Use tools such as AWS Compute Optimiser, Azure Advisor, and GCP Recommender to identify oversized virtual machines, underutilised databases, and inefficient storage configurations.
• Adopt pricing strategies such as Reserved Instances, Savings Plans, or Spot/Preemptible Instances to align with workload requirements and save on predictable or variable usage.

Implement tagging standards with showback and chargeback

• Effective cost allocation depends on structured metadata. Standardised, mandatory tags such as application, owner, environment, or cost centre help map usage to specific business units.
• Enforce tagging standards using AWS Tag Policies, Azure Policy, or GCP Tag Enforcement.
• Accurate tagging enables cloud cost visibility and accountability through showback reports and chargeback billing for cost recovery, driving accountability across teams.

Enable monitoring, alerting, and forecasting

• Cloud cost optimisation is not a one-off task. It requires continuous monitoring, proactive alerting, and accurate forecasting.
• Tools such as AWS Budgets, Azure Cost Management + Billing, and GCP Cloud Billing Reports allow teams to set budget thresholds and receive alerts when spend approaches or exceeds those limits.
• For organisations operating in multi-cloud environments, platforms like CloudHealth by VMware or Apptio Cloudability offer a consolidated view of spend and usage.

Cloud cost management is not only about cutting costs, but about creating financial discipline, transparency, and strategic decisionmaking. Organisations that treat cloud spend as an investment in innovation tend to realise greater value. In contrast, those without clear governance and accountability risk inefficiencies, missed opportunities, and budget overruns.

At Grant Thornton Bharat, we help enterprises implement FinOps operating models that align engineering, finance, and business goals. Through governance frameworks, automated reporting, and predictive forecasting, we enable leadership teams to make informed, 
value-based decisions

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