Cloud cost optimization and FinOps

In this article, you will read

• why cloud cost management plays an important role in the use of cloud services,
• how cloud cost optimizations are achieved
• and how d.velop uses the Enterprise Dashboard to strategically leverage the cloud.

Cloud services have become indispensable in enterprise IT because they offer flexibility, business agility, and innovation.
That part isn’t new. But there’s a significant challenge that concerns many companies: cost.
Current studies indicate that organizations waste an average of 30 to 35 percent of their cloud spending due to limited transparency, incorrect sizing, or unused resources.

For management, finance, and IT teams, this means transparency and cloud cost optimization must be top priorities. A systematic approach to cloud cost management helps prevent budget overruns, clarifies responsibilities, and supports an accurate profit and loss statement.

It’s not only the sophisticated services that determine the value of the cloud, but also the native capabilities it provides for technical oversight and business management. Cloud cost controlling makes a major contribution to successful cloud adoption—maybe not in the earliest stages, but certainly once multiple departments begin using the cloud (or multiple clouds). Still, organizations should consider cost transparency from the moment they begin their cloud journey to keep IT spending in check.

A common scenario unfolds like this: A company migrates applications to the cloud to increase flexibility and speed. In the beginning, costs appear manageable because only a few workloads are running. But as cloud usage grows, expenses rise, often unpredictably. Suddenly, the cloud bill surges, and no one can say with certainty which department generated which costs. Budgets fall out of alignment, and projects must be halted or recalculated.

The flexibility and easy availability of cloud services are among their greatest strengths—they enable real business agility.
On the other hand, decentralized, team-driven cloud adoption can lead to inefficient usage. Returning to the example, individual teams benefit from elastic pay-as-you-go resources that support agility, but from a company-wide perspective, reserved instances would be far more cost-effective. This becomes visible only when the organization adopts a cross-project, enterprise-level approach to cloud cost optimization.

• Cloud Waste:  Resources are provisioned but never used—for example, virtual machines for projects that continue running at night or on weekends.
• Lack of cost transparency: In large organizations with many users (departments, teams, and projects) and possibly multi-cloud environments, the sources of cloud costs quickly become unclear.
• Cost spikes caused by uncontrolled scaling: Automated workloads can grow faster than budgets can be reviewed or adjusted.
• Risks to budget and project planning: Limited predictability leads to poor investment decisions. This is especially critical for ISVs (Independent Software Vendors) that rely on cloud IaaS or PaaS as the backbone of their SaaS offerings.

Cost-related challenges don’t arise only on the user side. Multi-cloud users in particular know how difficult it can be to compare expenses across different cloud providers. In some cases, management services or network features are included; in others, they must be billed separately. Even the pricing models themselves can differ significantly, for example, when comparing various cloud storage options.

Classic methods such as Excel spreadsheets or end-of-quarter budget checks are no longer sufficient in the cloud. Cloud environments are dynamic—resources can appear and disappear within minutes. As a result, companies must rethink their approach to cost management as part of the broader cultural shift that comes with cloud adoption. What’s needed is cost management that is dynamic, granular, and fully integrated. This is exactly where FinOps comes in, providing the framework and practices required to keep cloud costs under control.

FinOps is a holistic approach to financial management in the cloud. It brings together technology, business, finance, and operational control to support value-driven decision-making. While the initial focus is on cost optimization, FinOps also aims to make the business value of the cloud transparent and to guide its use strategically.

• Focus: Transparency, predictability, and a balanced relationship between performance, features, and costs.
• Character: FinOps is a collaborative practice, much like DevOps. Governance, clear responsibilities, and shared decision-making processes are essential components.
• Principle: “Everyone in the company is responsible for their cloud costs.”

Note: This principle sounds good in theory, but in practice it’s essential to have designated FinOps owners. They coordinate all FinOps activities, ensure compliance with company-wide policies, and maintain cost transparency at the enterprise level. Individual projects or departments cannot accomplish this on their own.

The FinOps Foundation has defined core principles: 

• Teams take responsibility for their costs.
• Business value—not cost reduction alone—comes first.
• Measurement and benchmarking are essential.

Cloud cost management, by contrast, is more operationally focused. It includes: 

• Monitoring, optimizing, and controlling expenditures.
• Adhering to budgets and identifying anomalies.
• Implementing technical measures such as rightsizing, auto-scaling, reserved instances, and savings plans.
• Using tools such as cost reports, tagging strategies, and automation frameworks.

Cloud cost management is therefore more technical and operational, while FinOps additionally addresses the organizational and cultural dimension.

Benefits for different areas of the company 
FinOps and cloud cost management are becoming central governance functions for companies that rely on the cloud. All business units benefit from effective cloud cost management.

• Management: ROI measurement, competitiveness, and strategic decision-making.
• Finance: Budget adherence, forecasting accuracy, and risk management.
• IT: Efficiency, scalability, and technical cost control.
• DevOps and business units: Agility, rapid provisioning of resources, and clear cost accountability.

Cloud cost management can be divided into three phases, each contributing to overall cost optimization. The passive “inform” phase gathers data, creates transparency, and establishes a solid foundation for decision-making. “Optimize” places the company in an active role, enabling targeted adjustments to improve cost structures. “Operate” turns cost management into a continuous process of measurement and infrastructure refinement, aligned with business needs.

• Inform: Create transparency, break down costs, and clarify responsibilities.
• Optimize: Right-size resources, use reserved packages, and adjust workloads.
• Operate: Continuously monitor, measure KPIs, and improve processes.

The core tasks for establishing a structured approach to cloud cost optimization include:

• Analysis of the existing cost structure (how the cloud is used today and what is planned).
• Selection of optimal pricing models, which requires thorough knowledge of the provider’s available options.
• Allocation of costs to internal cost centers (building internal cost structures).
• Regular monitoring and reporting.

In addition, following the broader FinOps mindset means considering both technical and organizational measures. Efficient code, for example, directly affects the resources consumed and therefore the associated costs. Ultimately, every cloud cost management initiative contributes to the company’s overall sustainability.

• Rightsizing of CPU, memory, and instances.
• Use of reserved instances, savings plans, or spot instances.
• Shutting down unused resources.
• Automated alerts for budget overruns.

• Strengthen collaboration between Finance and IT.
• Clearly define responsibilities.
• Provide training on both technical and financial aspects.

With the Enterprise Dashboard, the Open Telekom Cloud provides a comprehensive tool that enables companies to establish effective cloud cost management. The Enterprise Dashboard serves as the central interface for cost management in the Open Telekom Cloud:

• Daily-accurate monitoring with visualization of all expenses and usage.
• Export options for analyzing data in internal systems and comparing costs with other hyperscalers.
• Forecasts for future cost trends.
• Automated configuration via config services.

The self-service functions of the Enterprise Dashboard are complemented by personal support from Customer Success Management and the hotline. Customers of the Open Telekom Cloud can discuss their cost situation and optimization options at any time with a dedicated contact person. This is particularly valuable for users with larger allocations.

A clear illustration comes from the software vendor d.velop. The leading provider of content services applications in the German-speaking market began its cloud journey with AWS. In 2023, the company from Münsterland chose to supplement its SaaS offering with the Open Telekom Cloud for reasons related to digital sovereignty.

 “For us as a SaaS provider, forecasting costs is an important topic,” notes Christian Lüttmann, Product Controller at d.velop. “We need transparency into costs in order to be able to monitor our pricing.” In 2023, the business informatics specialist “changed his perspective.” Since 2004 he had been involved in developing the software products; now he oversees the evolution of cloud costs and supports efforts to optimize them.

To plan the required cloud services, Lüttmann regularly coordinates with the product teams. This forms the basis for the cloud budget plan. Through the Enterprise Dashboard, he continuously records Open Telekom Cloud consumption data and reconciles it with the plan. A forecast is also generated to correctly size the provisions for upcoming invoices.

“More important to me than the visualization of consumption in the Enterprise Dashboard are the original billing and consumption data.” Once a month, Lüttmann exports this information via WebURL or API and checks whether items such as vouchers or discounts have been correctly applied. He then distributes the recorded consumption internally across cost centers. Although d.velop appears as a single “payer” within the Open Telekom Cloud, there are actually 40 individual contracts behind this umbrella.

To simplify this allocation in the future, Lüttmann plans to use the Tag Management Service. This makes it possible to assign “tags” to resources, enabling automatic allocation to projects and cost centers. The tag view is integrated directly into the Enterprise Dashboard.

“With transparent monitoring, we gained visibility into our various usage scenarios. We know our cost structures, how much Open Telekom Cloud is embedded in our products, and what internal effort is required for system maintenance. We can see how our use of the Open Telekom Cloud is becoming more professional with cloud cost management. It allows us to react early and steer our cloud usage.” Active management has already led to a concrete cost-reduction step: “In some areas, we were able to switch to reserved instances”, summarizes Lüttmann.

Cloud cost management is no longer optional; it is a necessity. Unchecked consumption of resources creates risks such as misinvestments, budget overruns, and competitive disadvantages. FinOps provides the methodological foundation to manage cloud spending in a value-oriented and controlled way. The Open Telekom Cloud offers the right tools for this, from the Enterprise Dashboard and automation features to personal support. Companies like d.velop demonstrate how these capabilities can significantly improve transparency, predictability, and efficiency.

Schedule a free initial consultation with Customer Success Management to sustainably optimize your cloud costs and unlock the full business value of your cloud strategy.