We often get asked about why us over the cost optimization tools offered by the Public Cloud Services Providers. I thought, it’s best that we address this widely and invite some debate and views from larger communities.

There are several reasons why organizations require third-party cloud cost management and optimization tools:

Lack of visibility: Although cloud providers offer capabilities for cost monitoring and optimization, they frequently lack the level of granular visibility needed to spot and correct cost inefficiencies. For example, organizations often require perspectives for applications or unit costs or customers; to establish greater context on their usage patterns. Organizations can better understand their cloud usage and costs by using third-party technologies, which offer more sophisticated analytics and monitoring capabilities.

Baselines vs actual usage: Organizations rent/subscribe to the IaaS & PaaS etc services to run their applications; in order to run their business processes. All these applications have design baselines for Performance & Capacity. Some of the third-party tools offer these functionalities to better make savings recommendations, than simple resource specific, which is often offered by the cloud service providers tools.

Complexity: Cloud environments are complex and difficult to manage, particularly as organizations scale their usage. Several third-party tools offer simplification, normalization and provide automated cost optimization features to reduce the time and effort required to manage cloud costs.

Multicloud environments: As per Gartner, over 89% of the organizations use multiple cloud providers; making it even more difficult to manage costs across all platforms. Third-party tools can provide a centralized view of all cloud usage and costs, making it easier to optimize spending across multiple environments.

Cost savings focus: Third-party tools purposely designed specifically to identify cost inefficiencies and optimize spending, leading to significant cost savings over time. These tools can only make money if they deliver on the cost savings promise.

Customization: Cloud providers offer generic cost optimization features, but these may not be tailored to the specific needs of each organization. Several third-party tools offer customization to the unique requirements of each organization, providing more targeted and effective cost optimization strategies. providers offer generic cost optimization features, but these may not be tailored to the specific needs

Show-back & charge-back: In most organizations, Cloud Platform teams manage the overall cloud services; including costs management. These teams need to recover the costs from their business partners or departments and require accurate mechanisms to be able to allocate usage based costs to these departments. The need for accurate show-back is even greater for the Managed Service Providers. The cloud tools often lack these capabilities; whereas the third-party tools are tailored for this functionality.

The research backs it: A recent study from Battery Ventures found out that 65% of the surveyed CxOs prefer third-party Cloud Cost Optimization Solutions; especially with focus on Cost Monitoring & Alerting, Visualization and AI-ML based optimization.

We find that most organizations, the ones using even a Single Cloud Services Provider will benefit significantly with the use of a third-party cloud cost optimization tool.

Let me know what do you use for your own FinOps practice or in general the Cloud Cost Optimization.