When you run your business on-premises there are certain expenses. These include the cost of employing trained IT professionals, renting or buying space, investing in hardware and paying that energy bill each month. When you run your business in the cloud, the bill may be different but there still are a number of costs.

Businesses no longer incur capital expenditures, but they now have to pay operating expenses. In the cloud, you aren’t investing in hardware, space, talent or electricity. But this doesn’t mean that the cloud is always cheaper. Especially if you don’t properly contain runaway cloud spend.

As cloud environments grow, so too do cloud costs. If businesses don’t have the necessary procedures in place to keep tabs on how many cloud services they’re consuming, expenses could get out of control. Cloud cost management has been cited as one of the top cloud initiatives for 2018.

Despite this, many enterprises waste an estimated 35% of their cloud spend. Pinpointing where this waste is occurring and figuring out how to eliminate it can be challenging. CFOs and CIOs can’t afford this inefficiency. They need to know where their cloud budget is going, require a systematic way to track their entire cloud spend and must be able to allocate consumption to different business units.

Here are a few areas where companies could be unnecessarily overspending:

• Running things 24/7: If an enterprises runs all of their cloud instances 24/7, it’s likely that they’re wasting money. This is where auto-scaling for certain workloads and automated scheduling set to run only during working hours, or when needed, can be beneficial.
• Over-provisioning: Historically, IT departments had to build systems that were big enough to handle peak demand. But that’s not how you successfully provision in the cloud. In the cloud, businesses should provision based on average consumption and then leave it to your cloud vendor to deal with the occasional spike in demand.
• Failing to leverage discounts: Many of the big cloud providers offer discounts when you commit to certain usage levels. Being mindful of the discounts on offer and leveraging these effectively can save a lot of money.
• Out with the old: Unnecessary cloud storage can rack up charges fairly quickly. The different types of cloud storage you use are charged at different rates. For example, there’s no point in placing end-of-lifecycle data that can’t yet be deleted in a highly accessible, and costly, storage. Similarly, there’s no value in continuing to store information when you don’t need to do so.

If CIOs and CFOs want to ensure sure that they’re driving innovation through cloud, cloud expense management is a must. With an effective cloud expense management solution in place, the CIO and CFO will have a clear picture of their entire cloud environment. This allows them to curb the waste described above, upping efficiency and reducing costs in the process. This information also enables them to better plan/budget for the future.