Cloud computing is all about subscription pricing for big tech companies and they’re happy to take as much money as they can from you. In reality, these costs are likely to be your largest single IT expenditure. Companies are often shelling out for dozens of tech services month after month. And when each of these subscriptions is costing thousands of dollars per year, those costs add up fast.
Since these monthly fees are pretty consistent, companies tend not to scrutinize them them year after year. But this “set-it-and-forget-it” mentality often leads to overspending without anyone noticing. Even the most diligent companies can end up with extra accounts, unused services, or outdated subscriptions that no one’s using but are still racking up unnecessary costs.
Why Cloud Costs Slip Through the Cracks
So why don’t companies regularly review and clean up these expenses? Here are five of the biggest reasons:
Lack of Visibility
In most organizations, visibility into cloud subscriptions is lacking. It’s surprisingly common for a cloud service to be managed via an employee’s personal credit card and later expensed through reimbursement processes. Known as “shadow IT,” this informal purchasing hides recurring expenses from the larger tech budget, while leaving IT and finance teams in the dark. When no one has a full view of what’s being spent, unnecessary services accumulate, and so do the associated risks and costs. By implementing a thorough review process, companies can keep tabs on every subscription, mitigate shadow IT, and optimize expenditure.
Absence of Personal Incentives
Often, the people best positioned to identify excess spend in cloud services are the same people who would shoulder the responsibility for that overspend. With no personal reward for undertaking the review process, and personal reputational risk for the overspend, there’s little motivation for employees to champion these initiatives.
Time-Consuming Process vs. Minute Cost Savings
At a glance, the economics of cloud cost reconciliation can seem unconvincing. If a service costs, say, $20 per user per month, a day’s work to validate licenses can feel like it’s not worth the effort. But the reality is that these “small” savings add up across departments and annual budgets. Even at a modest 10% to 20% savings rate, the aggregate effect can be significant. When factored into the long-term budget, these “minute” savings justify the time spent. Besides, there’s a persistent “house-in-order” incentive. A company cannot know how much they are overspending until this work is done.
Exposing Operational and Cybersecurity Issues
Reconciliation doesn’t just save money—it also uncovers potentially severe operational issues. One of the most common findings during these reviews is active accounts for employees who left the organization months ago. These orphaned accounts pose cybersecurity threats, as they remain potential entry points for malicious actors. Proactively identifying and deactivating unused accounts is a critical part of modern cybersecurity hygiene and is best addressed during regular reconciliations.
Strategy
The most critical reason for performing regular reconciliation is to align cloud spending with overall IT strategy. Adding and removing user accounts is necessary, but it’s only a start. A comprehensive view of all cloud services—and their costs—is essential to understand the strategic value that each service brings to the organization. Understanding the total cloud computing spend, broken down by user and department, allows companies to make informed decisions about future technology investments.
The Benefits of Implementing an Annual Reconciliation Process
With a consistent cost analysis and reconciliation process, organizations can expect to see immediate benefits in savings, often between 10% and 20% per user on aggregate cloud costs. This figure can be even higher if the process reveals previously undetected inefficiencies. And while the initial review is the most time-intensive, subsequent reviews become increasingly streamlined as records and processes improve.
Cost savings are only part of the equation, however. By validating each subscription and verifying account legitimacy, organizations also reduce cybersecurity risks, improve operational efficiencies, and gain deeper insights into the value each service delivers. The annual reconciliation becomes more than a cost-control measure—it becomes a strategic exercise that ensures the best use of limited financial resources.
In today’s competitive tech landscape, maintaining a lean, efficient operation is crucial. Regular reconciliation and cost analysis of cloud services not only control expenses but align those expenses with the company’s mission, ensuring that cloud services contribute meaningfully to the overall strategy.
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