Cloud Spending Infuriates Executives. Here’s How to Solve It.

While C-suite disagreements are to be expected, squabbles over the way a company spends on cloud services don’t have to be.

Written by Willy Sennott
Published on Aug. 24, 2023
Cloud Spending Infuriates Executives. Here’s How to Solve It.
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Let’s face it: Although the executives who run a business all belong to the same team, they don’t always act that way. For example, conflicting interpretations among executives about what their company should be spending on cloud infrastructure and services often leads to quarreling in the C-suite. To mitigate this risk and work together effectively, executive teams must gain a common understanding of the challenges and opportunities that their business faces.

To illustrate the point, I’d like to walk through one common source of executive conflict — cloud spending — and how to solve it. Fortunately, it’s a problem that can be resolved easily enough when executive teams learn to think about and measure cloud spending through a shared lens.

What Instigates C-Suite Cloud Disputes?

Each executive has different priorities for cloud spending.

  • A CFO wants to minimize spending and maximize predictability.
  • A CRO wants to optimize revenue streams.
  • A CTO wants the most up-to-date technology available.

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Why Cloud Spending Drives Executive Conflict

Most modern business leaders recognize the value of cloud computing, which is at the center of the IT strategies of about 85 percent of enterprises today.

Although it’s true that not every chief executive officer, chief financial officer or even chief technology officer is versed in the nuances of modern IaaS, SaaS and PaaS technology, most executives have at least a baseline understanding of how the cloud functions and which types of value (such as enhanced workload scalability and reduced infrastructure management requirements) it offers.

The problem is that each type of executive has different priorities.

A CTO’s top priority is enabling the business with the most effective cloud technology available. A CFO, in contrast, wants to minimize spending and stabilize cash flow, goals which may lead to questions about whether the technology that the CTO wants to adopt is the most cost-effective.

Meanwhile, you have chief revenue officers, who care about optimizing revenue streams. In the context of cloud spending, a CRO is most likely to focus on how much revenue can be attributed to cloud services, even though not all cloud resources are necessarily revenue-generating.

Essentially, each executive is primed to view and measure cloud spending differently and to push for different priorities when it comes to cloud cost optimization. For instance, the CFO might care most about making changes that maximize the predictability of cloud spending, while the CTO is more likely to prioritize the company’s ability to make the most of all cloud services available to it, including those whose costs are more variable than the CFO would like.

These conflicting viewpoints can quickly lead to conflict and contention within the C-suite about how best to approach the business’s cloud strategy and cloud optimization initiatives. Even if everyone agrees, as any reasonable executive will, that saving money in the cloud is important, they may not see eye-to-eye when it comes to figuring out how best to manage cloud spending.

 

How to Break Apart the Black Box of Cloud Spending

How do you bring conflicting executive vantage points into alignment? The answer is to achieve clarity into cloud spending and its impact on the business.

By default, cloud spending tends to be a black box. Businesses might know the total amount they spend on cloud infrastructure and services, but they often know much less about exactly which cloud solutions they are paying for, let alone how those solutions are related to revenue, customer acquisition, customer retention and other business outcomes.

To provide executives with visibility into questions like these, it’s critical to track cloud spending using unit economics. For example, you should be able to measure how much revenue is attributable, directly as well as indirectly, to every dollar you spend in the cloud. Where possible, you should dive deeper so that you know how each dollar spent on a specific type of cloud resource relates to revenue. You can achieve these goals by establishing effective chargeback models and operationalizing them with tools that support granular chargeback visibility.

This visibility makes it possible for executives to coordinate cloud cost management initiatives in a collaborative way. The CTO can obscure investments by pointing to the revenue that they are driving, for instance, which will help bring the CRO and CFO on board.

In turn, you’re less likely to end up with conflicting visions of how best to use the cloud. Company leaders can take a cool-headed, data-driven approach to figuring out exactly how to maximize ROI in the cloud, mitigating fears that the company’s cloud spending can’t be justified by its business impact.

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Leading the Business Forward

There are plenty of issues that executives might fight over other than cloud spending, of course. But if you can achieve clarity within the C-suite surrounding how cloud spending is measured and optimized, you’re one step closer toward achieving a unified executive team where each stakeholder supports and collaborates with peers to help lead the business forward.

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