Cloud cost optimisation: improve visibility and reduce cloud costs

Most organisations don’t set out to overspend on cloud. If anything, it happens gradually. 

For starters, new workload is provisioned, a test environment is left running, storage grows, and AI services are added. What’s more, teams spin up new resources to solve immediate business problems, while yesterday’s infrastructure quietly continues billing in the background. 

The result is familiar to many technology leaders: cloud costs rise faster than expected, forecasting becomes harder, and monthly invoices become increasingly difficult to explain. 

Indeed, industry data suggests the problem is widespread. The Flexera 2026 State of the Cloud Report found organisations estimate around 29 per cent of cloud spend is wasted, a figure that increased this year after several years of decline, driven largely by the growing complexity of AI workloads. An earlier Flexera survey also found that 84 per cent of organisations identified managing cloud spend as their biggest cloud challenge. 

The encouraging news is that much of that waste is recoverable. 

Through a CloudFlex Cost Optimisation Assessment, one Interactive customer reduced ongoing public cloud costs by 25 per cent, while another saved more than USD $11,000 every month after consolidating 13 AWS accounts into one. 

Cloud cost optimisation is the discipline of understanding where cloud spend is creating value, where it isn’t, and making informed decisions that improve visibility, reduce waste and create more predictable costs over time. 

This guide explains what cloud cost optimisation involves, why cloud bills blow out, the practical levers that make the biggest difference, and why cost predictability has become especially important for regulated industries such as financial services and superannuation. 

 

What cloud cost optimisation actually involves 

Cloud cost optimisation is the practice of matching cloud spend to the value it delivers, ensuring workloads run as efficiently as possible without sacrificing performance, security, scale or resilience. 

Despite the name, cloud cost optimisation isn’t about cutting costs for the sake of it. Nor is it about switching workloads off or moving everything out of the cloud. It’s about understanding where cloud investment is delivering value, identifying spend that isn’t, and making better decisions about how workloads are designed, deployed and managed. 

Effective cloud cost management rests on three connected disciplines. The first is visibility: knowing where every dollar is being spent, who owns it and which workloads are driving cost.  

The second is efficiency: removing waste, rightsizing resources and ensuring environments reflect actual business demand rather than historical assumptions. The third is commercial optimisation: choosing the right pricing model and the right location for each workload, whether that’s public cloud, private cloud or a hybrid environment. 

Together, these disciplines form the basis of what the industry commonly refers to as FinOps, which brings technology, finance and operations together around shared cloud cost data. The label itself is less important than the outcome. Good cloud cost management is an ongoing discipline, not a one-off clean-up, because cloud environments constantly evolve as applications, data and business priorities change. 

This guide explores why cloud bills grow faster than expected, the practical steps organisations can take to improve cloud cost visibility, and how predictable commercial models can help reduce cloud costs over the long term.  

For regulated industries such as financial services and superannuation, where technology costs are increasingly scrutinised by boards and regulators alike, cloud cost optimisation has become as much a governance discipline as a financial one. 

 

Why cloud bills blow out

Cloud bills rarely blow out because of one bad decision. They grow gradually as environments become larger, more complex and harder to govern. 

At the same time, cloud makes it incredibly easy to provision new resources, but much harder to know when those resources are no longer needed. Consumption-based pricing means every virtual machine, storage volume, database and service continues billing while it exists, whether it’s actively delivering value or not. Every new resource added to the environment contributes to the monthly bill until someone actively removes, resizes or reconfigures it.  

As environments evolve, unused storage accumulates, test environments are forgotten, workloads become over-provisioned and applications continue running long after demand has changed. 

The result is cloud bill shock: a monthly invoice that grows faster than the business it supports. 

And the newest contributor is AI. AI services, model training, inference workloads and new licensing costs are being layered onto existing environments rather than replacing them.  

That’s one reason the Flexera 2026 State of the Cloud Report found estimated cloud waste increased to 29 per cent, reversing several years of improvement. AI cost management has quickly become part of cloud cost optimisation, not a separate conversation. 

Meanwhile, skills also play a role. Many organisations built cloud environments quickly but haven’t expanded governance, FinOps or cloud management capabilities at the same pace. Without clear ownership and regular review, cloud waste becomes difficult to identify, let alone eliminate. 

Fortunately, many of the biggest savings are also among the easiest to recover. 

Four practical places to start 

• Right-size over-provisioned resources. Cloud-native tools such as AWS Compute Optimizer and Azure Advisor can identify workloads consuming more compute or memory than they need. 
• Remove orphaned resources. Unattached storage volumes, idle load balancers, unused IP addresses, old snapshots and forgotten development environments often continue generating costs long after they’ve stopped delivering value. 
• Schedule non-production environments. Development, testing and training environments rarely need to operate 24 hours a day. Automatically shutting them down outside business hours can produce immediate savings. 
• Review commitment discounts. Stable workloads may benefit from Reserved Instances or Savings Plans, provided usage patterns are well understood before making long-term commitments. 

These steps often recover meaningful savings within weeks, but they’re only the beginning. Sustainable cloud cost optimisation comes from combining visibility, workload placement and commercial decisions, themes explored throughout the rest of this guide. 

For regulated organisations, the stakes are even higher. In financial services, cloud costs increasingly fall under board and regulatory scrutiny. In superannuation, every dollar spent unnecessarily on technology is a dollar that doesn’t flow back to members.  

As funds consolidate, inherited cloud environments, duplicate platforms and overlapping supplier relationships only increase the cost surface, making disciplined cloud cost management as much a governance issue as a financial one. 

 

Get cloud cost visibility before you optimise 

Almost every successful cloud cost optimisation program begins with one thing: cloud cost visibility. 

It’s difficult to reduce cloud costs if you can’t clearly see where they’re coming from. In many organisations, cloud spend is spread across multiple providers, business units, applications and environments, making it difficult to understand which workloads are creating value, which are driving unnecessary cost, and who is ultimately accountable for either. 

The principle is simple: you can’t optimise what you can’t see. In fact, building cloud cost visibility starts with a few practical foundations: 

Consistent tagging and allocation

Every cloud resource should be tagged by application, business unit, environment and cost centre so costs can be traced back to an owner. Poor or inconsistent tagging is one of the most common reasons cloud cost data becomes difficult to interpret. Automated tagging policies can help improve consistency as environments grow. 

A single view across cloud environments 

Native tools such as AWS Cost Explorer and Azure Cost Management provide valuable insight into their own platforms, but most organisations now operate across more than one cloud. A unified view of cost, usage and performance across the entire environment provides a stronger foundation for decision-making and cloud financial management. 

Dashboards, budgets and proactive alerts 

Cloud cost information is most valuable when it’s available to the people making day-to-day decisions. Dashboards, budgets and anomaly alerts help teams identify unusual spending early, rather than waiting for a surprise at the end of the month. 

Forecasting and accountability

Forecasting compares projected cloud spend against actual costs, giving finance and technology leaders greater confidence when planning future investment. More importantly, it creates accountability. When every dollar has an owner, cloud cost optimisation becomes an ongoing discipline rather than an annual cost-reduction exercise. 

This is also where an experienced cloud partner can make a meaningful difference. Interactive helps customers build a single view of cloud cost, usage and performance across AWS, Azure and hybrid environments, providing the visibility needed to make informed decisions before costs become difficult to control. 

Hidden cloud costs: egress fees and licensing traps

Some of the biggest cloud costs are the ones organisations don’t see until the invoice arrives. 

Data egress costs are one of the best-known examples. Storing data in the cloud is often relatively inexpensive, but moving that data between regions, availability zones or out of the cloud altogether can attract additional charges that quickly accumulate. Because these costs aren’t tied to a single virtual machine or application, they can be difficult to identify until they become a meaningful part of the monthly bill. 

Licensing is another area where costs can quietly escalate. Software licensed by core, processor or instance doesn’t always translate neatly into a cloud environment, while operating system licensing, third-party software and duplicated licences can add costs that aren’t always considered when organisations compare cloud pricing with on-premises infrastructure. 

The good news is that cloud providers also offer opportunities to reduce costs, particularly where workloads are stable and predictable. 

For example: 

• Reserved Instances and commitments can reduce compute costs by up to around 72 per cent compared with on-demand pricing across AWS and Azure, in return for committing to a particular workload configuration over one or three years. 
• Azure Savings Plans can reduce eligible compute costs by up to around 65 per cent, applying discounts automatically as workloads change while committing to an agreed hourly spend. 

It’s important to remember these are maximum savings under specific conditions, not typical outcomes. Reserved pricing only delivers value when organisations clearly understand their workloads. Commit to the wrong resources, or commit too early, and yesterday’s discount can become tomorrow’s cloud waste. 

That’s why cloud cost visibility comes first. The better organisations understand their workloads, usage patterns and future demand, the more confidently they can choose pricing models that reduce costs without introducing unnecessary commercial risk. 

When Azure or AWS cost optimisation isn’t enough: workload placement 

Cloud cost optimisation doesn’t always begin with reducing the cloud bill. Sometimes it begins by asking a more fundamental question: Is this workload running in the right place? 

Public cloud has transformed the way organisations build and scale technology. For applications with highly variable demand, seasonal peaks or rapidly changing workloads, consumption-based pricing delivers enormous flexibility. But flexibility doesn’t automatically translate into the lowest long-term cost. 

This is where Azure cost optimisation and its AWS equivalent eventually reach their limit. Organisations can right-size workloads, remove waste and negotiate discounts, but if a workload is running on the wrong platform, they’re optimising the wrong question. 

As a general guide: 

• Elastic or unpredictable workloads, such as development environments, seasonal applications and rapidly growing digital services, are often well suited to public cloud, where organisations only pay for the capacity they need. 
• Steady, always-on workloads, including core business systems, databases and long-running applications, may deliver better commercial outcomes on private cloud or dedicated infrastructure with more predictable pricing. 
• Highly regulated or business-critical workloads may also be better suited to sovereign or private cloud environments, where data residency, operational control and resilience are just as important as cost. 

Indeed, the difference can be significant. 

In one customer engagement, modernising a heritage application in its existing environment was estimated to cost around $3–4 million, compared with a public cloud migration estimate of approximately $22 million. Rather than assuming cloud migration was the answer, the organisation assessed where the workload would deliver the greatest long-term value. 

The lesson? Every workload deserves its own business case. Cloud cost optimisation isn’t about moving everything into public cloud or everything out of it. Instead, it’s about placing each workload where it delivers the best balance of cost, performance, resilience and operational outcomes. 

For organisations evaluating a broader shift away from public cloud, Interactive explores that decision in more detail in its guide to cloud repatriation. The important point here is that workload placement is one of the most powerful cloud cost optimisation levers available. 

Exit strategy and cost 

Cloud cost optimisation is about the environment you’re running today, but also about understanding what it would cost to move tomorrow. 

A well-designed cloud exit strategy is both a commercial discipline and a governance discipline. While cloud migration decisions often focus on getting workloads into a platform, organisations should also understand what it would take to leave. Without that visibility, today’s cost savings can become tomorrow’s transition costs. 

Some of the biggest exit costs aren’t immediately obvious. They can include: 

• Minimum spend commitments that continue billing even as services are being wound down. 
• Data egress costs associated with moving large volumes of data out of the cloud. 
• Transition and parallel-running costs while old and new environments operate side by side during migration. 

For APRA-regulated organisations, planning for these scenarios is more than good commercial practice. CPS 230 expects organisations to understand how they would transition services from material providers in an orderly and resilient way. A cloud arrangement without a considered, costed and practical exit strategy can create both commercial risk and operational risk. 

The lesson is straightforward: understand the exit before you commit to the entry. Organisations that evaluate exit costs early are better placed to negotiate commercial terms, avoid unexpected costs and retain the flexibility to adapt as business priorities change. 

For a deeper look at APRA’s expectations around provider management, operational resilience and exit planning, see Interactive’s CPS 230 guide. 

 

Making cloud spend predictable 

The ultimate goal of cloud cost management is a lower cloud bill, but also one that organisations can understand, forecast and confidently defend. 

Reducing cloud costs is important, but so is removing uncertainty. A monthly invoice that changes dramatically with usage makes budgeting difficult, forecasting unreliable and conversations with finance teams, boards and executive stakeholders more challenging than they need to be. 

That’s why effective cloud spend management isn’t just about reducing consumption. It’s also about choosing the commercial model that best fits the workload. 

Consumption-based pricing delivers tremendous flexibility for workloads that scale up and down. But for stable, always-on environments, a fixed-price or predictable commercial model can provide greater financial certainty, making it easier to forecast expenditure, manage budgets and plan future investment. For many organisations, predictability becomes just as valuable as flexibility. 

The point isn’t that one cloud model is inherently better than another. It’s that every workload should be matched to the commercial model that delivers the right balance of cost, flexibility and predictability. 

This becomes especially important in regulated industries. Financial institutions and superannuation funds need to forecast technology costs, justify investment decisions and demonstrate prudent financial management to boards, auditors and regulators. In those environments, predictable cloud costs aren’t the opposite of optimisation—they’re often its most valuable outcome. 

Ultimately, good cloud financial management combines technical optimisation with commercial certainty. When organisations understand where workloads belong and choose pricing models that reflect how those workloads are actually used, cloud cost optimisation becomes an ongoing capability rather than a monthly exercise in explaining unexpected bills. 

What this means for super funds and financial services 

For superannuation funds and financial institutions, cloud cost optimisation is about more than reducing expenditure. In fact, it has become a governance issue. 

Three realities make cloud cost discipline particularly important in regulated environments. 

The first is member outcomes. For superannuation funds, every dollar spent unnecessarily on technology and administration is a dollar that doesn’t flow back to members. That makes operating efficiency a fiduciary responsibility, not simply an IT objective. 

The second is consolidation. As funds merge, they inherit cloud platforms, applications, supplier contracts and operating environments that were never designed to work together. What may once have been a manageable cloud footprint can quickly become a much larger environment that is more expensive to operate, more difficult to govern and harder to optimise without a clear view of where costs are coming from. 

The third is regulatory scrutiny. APRA’s focus on operational resilience has raised expectations around governance, accountability and prudent management of critical technology services. Predictable cloud costs, clear visibility and disciplined workload management all contribute to stronger operational oversight. 

These challenges also create opportunities. One financial services organisation inherited AWS and Azure environments through an acquisition, resulting in duplicate services, unnecessary resources and limited visibility across its cloud estate. Working with Interactive, the organisation reduced ongoing public cloud spend by 25 per cent by removing orphaned resources, moving workloads to more cost-effective platforms and creating a single view of cloud cost and usage. 

For regulated organisations, cloud cost optimisation is ultimately about more than recovering waste. It’s about building an environment that is easier to govern, easier to forecast and better positioned to support long-term operational resilience. 

For more information about Interactive’s work with regulated organisations, explore our Financial Services page or read our guide to APRA CPS 230. 

 

How Interactive helps organisations manage cloud costs

Managing cloud costs requires reducing monthly invoices, but also requires visibility across the environment, confidence in where workloads belong, and a commercial model that supports long-term operational and financial outcomes. 

Interactive helps organisations manage cloud costs across the full lifecycle of cloud optimisation: improving visibility, eliminating waste, rightsizing workloads, selecting the right commercial model and designing environments that remain efficient over time. As an AWS Consulting Partner and Microsoft partner, Interactive delivers cloud cost optimisation services across AWS and Azure, while also supporting organisations that achieve better long-term value by placing steady, predictable workloads on Australian private cloud and dedicated infrastructure. 

For most organisations, the journey starts with a CloudFlex Cost Optimisation Assessment. The assessment provides a single view of cloud spend, usage and risk, identifying opportunities to reduce waste, improve efficiency and create more predictable cloud costs through a prioritised action plan. 

Here are some results: 

One financial services organisation reduced ongoing public cloud spend by 25 per cent after inheriting AWS and Azure environments through an acquisition. By improving visibility, removing unnecessary resources and placing workloads more effectively, it created a simpler and more cost-efficient cloud environment. 

Another organisation saved more than USD $11,000 every month following a CloudFlex Cost Optimisation Assessment. The engagement consolidated 13 AWS accounts into one, completed 58 optimisation, security and reporting improvements, and reduced ongoing cloud costs without disrupting day-to-day operations. 

Both organisations followed the same principles explored throughout this guide: understand where cloud spend is creating value, remove unnecessary complexity, and match each workload to the environment where it performs best. 

If you’re looking to reduce cloud costs, improve cloud cost visibility or build a more predictable commercial model, a CloudFlex Cost Optimisation Assessment is a practical place to start.  

It provides a structured review of your cloud environment, together with a prioritised roadmap to recover waste, improve efficiency and make cloud spend more predictable over time.