Cloud cost management strategies for upcoming volatile decade

What are the biggest challenges you anticipate organizations will face in managing cloud costs in the next decade?

Tim Crawford, founder and CIO strategic adviser of advisory firm AVOA

In the coming years, one of the biggest challenges facing enterprises is demonstrating value beyond simple cost management. There is a more significant opportunity from the relationship between outcomes and operations, however, it requires significant planning and effort to achieve.

Each of the public cloud providers, like AWS and Google, are enhancing the transparency of their costs. Applications built in the cloud are getting more complicated and it is critical for providers to help expose the true value of their solutions. I would expect solutions from FinOps and technology business management (TBM) take a more business-oriented approach that puts preference on talking about value over cost, and across providers and modes. Services span from SaaS to public cloud to on-premises.

Jay Litkey, senior vice president of cloud and FinOps at Flexera

Balancing app performance and cost remains a real engineering challenge. It requires strong governance, clear accountability and thoughtful architecture. AI workloads have introduced a new dimension of complexity because their usage patterns are more volatile to predict than traditional workloads. Organizations will need real-time optimization and strong unit economics to maximize value and quantify results as AI shifts from pilots to full production.

Hyoun Park, vice president of telecom and mobility management at Calero

The biggest trend I foresee is the consolidation of cloud cost management and related invoicing, payment, sourcing, inventory, usage, coding and resource requests, governance, workflow and automation tasks into more consolidated platforms and solutions. It is no longer enough to simply manage bills and provide basic monthly visibility or to provide alerts. This means that we will both see some shocking failures, such as the recent receivership of VC-backed Vega Cloud, as well as an increasing set of rollups as FinOps matures from a technical practice to a business practice.

A second trend is in the aggregation of IT spend category types. FinOps has already started to look at the challenge of SaaS spend management, but a full reckoning of FinOps should include all of the key technologies that transform and scale human effort. This includes the computing scale of cloud-based infrastructure, but also includes the on-demand power of SaaS, the granular APIs that pull out data and workflow outputs, the automations that can 1,000x certain data checks, the hardware and devices that we use to access SaaS and cloud computing, and of course AI, which is being used to enhance productivity and automations across the board.

What are the most effective strategies organizations should adopt to optimize cloud costs in 2026 and beyond?

Crawford: Beyond the basics, managing costs quickly gets complicated. Enterprises need to start with one well-defined area to get their arms around how to manage costs within the given framework (FinOps/TBM). Understand what requirements a provider may have, like tagging, and consider how to automate as many of those processes as possible. I expect that over time, the process will get increasingly more automated.

Organizations need automation to make a dent on cloud inefficiencies, which continues to grow with increasing cloud spend.

Litkey: Organizations need automation to make a dent on cloud inefficiencies, which continues to grow with increasing cloud spend. Some organizations do not have fully automated end-to-end rate optimization. Instead, they rely on human-mediated processes that are potentially error-prone, labor-intensive and fall short of maximizing value in the cloud. Optimizing rates manually is challenging when usage is dynamic, but commitments are not. There is the risk of unutilized commitments and wasted spend when usage decreases. Rate optimization automation allows organizations to increase commitment flexibility, so they can adjust their commitments quickly to match changes in usage and achieve world-class Effective Savings Rates.

Looking ahead, the most effective FinOps platform will bring together the trifecta: automated rate optimization, automated workload optimization, and comprehensive visibility and governance. When organizations optimize both sides of the equation -- rate and workload -- in parallel, and measure outcomes with consistent metrics, they create a cycle of continuous cost efficiency.

Park: Optimizing cloud costs starts with several foundational practices:

• Manage the inputs for requesting cloud services (code and orders).
• Track all inventory from a category and status perspective to avoid unplanned access or use.
• Monitor usage on a near-real-time basis with a focus on anomalies or sudden changes.
• Manage invoices to ensure resources are billed accurately and with the correct units and prices and discounts.
• Retire services that are no longer operationally needed.
• Enforce contractual obligations across all financial, operational and technical expectations.
• Negotiate new contractual terms when possible to improve access and flexibility to enhanced billing and rate utilization opportunities.

Cloud cost optimization must be a lifecycle process that manages cost from inception to retirement.

Kathleen Casey is the site editor for SearchCloudComputing. She plans and oversees the site, and covers various cloud subjects including infrastructure management, development and security.