How cloud cost visibility impacts business and employment

In its latest The State of Cloud Cost in 2024 report, CloudZero illuminates the serious implications of cloud cost management and its effect on business stability and job security. The conclusions are interesting.

CloudZero’s survey, which drew insights from 1,000 finance and engineering professionals, underscored a crucial element in cloud cost management: the pivotal role of engineering teams. These are not just the “nerds” who operate the technology but key players who can significantly influence cost outcomes.

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According to the survey, 81% of respondents indicated that cloud costs were effectively managed and predictable when engineers managed them. This shows a positive relationship between engineering ownership and better cloud cost management. This shift in perception has significant business implications for effective cloud cost management.

One revelation of the report is the high concern that job security is linked to fluctuating cloud costs. 75% of employees expressed fear of losing their jobs if cloud expenses should suddenly increase by 50% or more. This indicates a clear need for more robust cloud cost management strategies.

Cloud engineers rarely seem concerned about costs, particularly as they relate to their own employment security. I’m not sure I’ve ever seen this relationship. Still, taking it into account, fear-based leadership could leverage the fear of job loss as a primary motivator to encourage better cloud cost management.

I’m not down with wielding layoffs as a weapon, but I suspect many enterprises ignore most details of whatever approach works. If I were mentoring someone in that scenario, I would tell them to find another employer. However, this is not the first time I’ve seen fear, uncertainty, and doubt tactics drive behavior or changes around cost; I just disagree with that leadership tactic. I look for more creative problem solvers and team motivators in my leadership candidates.

Cost management on the frontline

What rings true is that engineers are on the frontline in controlling cloud costs. Indeed, they drive most overspending (or underspending) on cloud services and the associated fees. However, they are the most often overlooked asset when it comes to dealing with these costs.

The main issue is that the cloud cost management team, including those responsible for managing finops programs, often lacks an understanding of engineers’ work and how it can affect costs. They assume that everything engineers do is necessary and unavoidable without considering there could be potential cost inefficiencies.

When I work with a company to optimize their cloud costs, I often ask how they collaborate with their cloud engineers. I’m mostly met with questioning stares. This indicates that they don’t interact with the engineers in ways that would help optimize cloud costs. Companies look at their cloud engineers as if they were pilots of passenger aircraft—well-trained, following all best practices and procedures, and already optimizing everything. Unfortunately, this is not always true.

The reality is that various engineers, including those working with databases, security, coders, and infrastructure, have complete control over the cost of cloud computing. They can either increase efficiency to optimize costs or allow for inefficiencies that can lead to excessive expenses. They have the power to deliver the same business benefits with expenses that can vary by millions of dollars per year. If no one questions their practices, the behavior continues. I have personally witnessed this phenomenon.

Driving behavior changes

So, if engineers drive many of the business outcomes of using cloud resources, how do we encourage desirable behavior to optimize these outcomes?

Well, from the study, you can point out that they may lose their jobs if they don’t do better at cost optimization. Give that a try, and you’ll find that high employee turnover becomes a problem, and you add productivity problems to your cloud resource cost overruns. You don’t want either problem.

A better approach is to drive behavior changes by doing two things:

First, ensure the engineers have visibility into cost metrics they can affect. Most of the engineers that I work with complain about their lack of visibility into cloud resource utilization related to their work.

If they can’t see whether they’re moving in the right direction, you have no hope of driving behavioral changes that will provide better cloud cost optimization. In many instances, just implementing this change can save millions of dollars each year without giving up any business value, such as reducing the performance of a storage or computing system to save money.

Second, this approach identifies more efficient cost optimization practices. It is important to note that we do not share any cost savings with the engineers. However, certain metrics allow them to perceive a personal benefit from providing better cost optimization.

An AI engineer who lowers cloud storage costs by implementing more efficient model training processes should expect to see career benefits from their efforts. This may include bonuses or direct recognition of the engineer or team responsible for driving these changes.

Remember that most engineers do not leave their jobs because of pay but because they feel they are not being appropriately recognized or appreciated. Cost optimization practices are areas where most engineers feel overlooked or underutilized. Therefore, it’s essential to ensure that the right people are on the frontline of cloud cost management with appropriate recognition and benefits for their work.

By the way, this is also an effective way for creative problem solvers and team motivators to progress quickly into higher leadership positions or to reverse the damage done by fear-based leadership.