Want to cut 30% of your cloud costs? Most SaaS companies waste nearly a third of their cloud budget on unused resources, oversized infrastructure, and abandoned environments. The solution? FinOps – a framework that brings IT, finance, and business teams together to optimize cloud spending and turn waste into growth opportunities.

Key Takeaways:

• Cloud waste is paying for resources you don’t fully use – like idle servers or forgotten test environments.
• FinOps helps SaaS companies save up to 30% by tracking costs, assigning ownership, and automating optimizations.
• Quick wins include shutting down unused environments, right-sizing servers, and using cost-saving tools like AWS Reserved Instances.
• Long-term success comes from building a culture of cost awareness and collaboration across teams.

Start saving today by auditing your cloud usage, implementing cost tracking tools, and embedding FinOps practices into your operations. Every dollar saved on waste can fuel your company’s growth.

NonStop FinOps: Lessons from Automating $100 Million in Cloud Savings

Where SaaS Companies Waste Cloud Money

Understanding where your cloud budget slips away is the first step to regaining control. For scaling SaaS companies, cloud waste often clusters in three key areas, potentially draining over 30% of your monthly expenses without contributing to business growth. Let’s break down these costly pitfalls and why refining your cloud operations is so important.

Idle and Underused Resources

One of the biggest culprits behind wasted cloud spending is idle or underutilized resources. These include servers, databases, and other resources that rack up charges even when they’re barely being used. A staggering 82% of cloud and IT decision-makers report encountering unnecessary cloud costs, with idle resources topping the list. Common examples include EC2 instances running at less than 3% CPU utilization over two weeks, Elastic Load Balancers (ELBs) with no traffic, and RDS instances or Elastic Block Store volumes that sit unused. Even NAT Gateways with no active connections for 14 days can quietly inflate your bill. Without proper monitoring, these idle resources can pile up, gradually chipping away at your budget.

Oversized Server Instances

Another major money drain comes from oversized server instances – essentially, paying for far more computing power than your applications actually need. This often happens when companies overprovision servers during initial setup or migrations but fail to adjust them later. For example, running an m6a.48xlarge instance (192 vCPUs) at $8.2944/hour instead of an m6a.large (2 vCPUs) at $0.0864/hour highlights how overprovisioning can spiral costs. Right-sizing your instances can lead to significant savings. One company reduced EC2 costs by 17% using automated right-sizing tools, while Digital Guardian improved AWS infrastructure efficiency by 45% even as their EC2 instance count grew from 650 to 800. Regular reviews and tools like AWS Compute Optimizer can help you pinpoint and fix these inefficiencies.

Forgotten Development and Test Environments

Development and test environments are essential for building and maintaining SaaS products, but they can also become a major source of waste. These environments often remain active long after their purpose has been served. In fact, 78% of companies report that up to half of their cloud spending is wasted annually, with an average of 32% lost to inefficiencies. Development and test setups frequently mirror production environments and run 24/7, even though they’re used sporadically. Temporary environments created for patching, feature testing, or CI/CD pipelines can also linger if not properly cleaned up. Implementing automated lifecycle management – such as scheduled shutdowns, time-to-live (TTL) policies, and regular audits – can drastically reduce this waste.

How to Build a FinOps Framework That Works

Create a FinOps framework that not only delivers immediate cost savings but also integrates cost awareness into your daily operations.

Phase 1: Set Up Cost Tracking and Ownership

The first step in building a successful FinOps framework is gaining visibility and establishing accountability. Without a clear understanding of where your money is going and who is responsible for spending it, managing cloud costs effectively becomes nearly impossible.

Start by implementing a comprehensive tagging strategy. Tag your cloud costs by department, project, and environment to improve transparency and make it easier to identify spending patterns.

Next, invest in a unified cost-tracking tool. While cloud providers offer basic tools, they often lack the depth needed by scaling SaaS companies. Tools that aggregate costs across multiple providers can give you a clearer, more complete picture of your spending.

Set up alerts to flag anomalies and form a dedicated FinOps team with members from finance, engineering, and operations. This team should define key practices, establish measurable KPIs, and ensure cost considerations are part of every technical decision.

Finally, assign costs to specific business units to increase accountability. When teams see how their decisions directly impact the company’s finances, they naturally become more mindful of costs.

This foundation of cost tracking and ownership sets the stage for identifying and eliminating waste quickly.

Phase 2: Get Quick Wins by Cutting Immediate Waste

Once you have visibility into your costs, focus on eliminating obvious waste to generate fast returns.

Conduct thorough audits of your resource usage. Look beyond cloud infrastructure to SaaS applications, where waste is rampant. For instance, $127 million is wasted annually on unused software licenses, with 42% of licenses becoming shelfware. Compare actual usage to purchased licenses to identify easy savings.

Take a proactive approach to license management by removing inactive users and right-sizing infrastructure to match actual needs. This ensures efficiency without sacrificing performance.

Automate resource management by setting up scheduled shutdowns and TTL policies to eliminate unnecessary costs.

Consolidate redundant tools and services across your organization. A detailed audit can uncover opportunities to streamline and standardize, reducing costs while maintaining functionality. For example, a company spending $3.6 million annually on SaaS identified $450,000 in savings within five months by analyzing spending and consolidating vendors.

Lastly, negotiate contracts strategically. Timing matters – vendors are often more flexible during Q1 when they’re eager to close deals. Offering case studies or publicity in exchange for discounts can also work in your favor.

These quick wins not only deliver immediate savings but also lay the groundwork for a more efficient FinOps culture.

Phase 3: Build a FinOps Culture for Long-Term Results

After addressing immediate savings, shift your focus to embedding cost optimization into the fabric of your organization.

Start by securing executive buy-in and aligning on clear goals. Assign cloud spending accountability to individual teams and provide regular education on cost-saving strategies.

Define benchmarks and KPIs to measure progress. Metrics like cost per customer, cost per transaction, or cost per feature deployment can help ensure optimization efforts align with business growth.

Foster transparency by making spending data accessible to all stakeholders. When teams have real-time visibility into how their decisions affect costs, they can make smarter, data-driven choices.

Encourage collaboration through regular FinOps meetings. Share internal success stories and recognize team achievements to promote a culture of cost-consciousness.

Leverage automation where possible to minimize manual work. Tools for tracking trends and analyzing variances can keep costs in check, while automated responses can address common optimization opportunities.

Celebrate successes and refine your approach based on feedback. Recognizing team efforts not only reinforces cost-awareness but can also spark healthy competition, driving further improvements.

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Tools and Technologies for FinOps Success

Building a strong FinOps strategy means using the right tools to cut down on waste and redirect funds toward innovation. With as much as 32% of cloud budgets potentially going to waste, it’s essential to pick a mix of native, third-party, and custom tools that align with your goals. Start with the tools provided by your cloud provider, then expand your capabilities with third-party and custom solutions for deeper insights and control.

Cloud Provider Built-In Tools

Your cloud provider’s native tools are a great starting point. They’re cost-effective and provide real-time data along with detailed cost breakdowns. Each major provider offers a suite of cost management tools to help you gain foundational visibility into your spending.

• AWS: Tools like AWS Cost Explorer help analyze spending in detail, while AWS Budgets set spending limits. AWS Compute Optimizer provides rightsizing recommendations, and AWS Trusted Advisor offers optimization suggestions across multiple areas.
• Azure: Microsoft Cost Management tracks and analyzes spending, while Azure Advisor provides recommendations for cost and performance improvements. Azure Budgets and Alerts help with proactive monitoring.
• Google Cloud Platform: Google Cloud Console includes reports and dashboards for cost tracking. The Google Cloud Pricing Calculator aids in forecasting, and Budgets and Alerts keep spending in check.

Feature	AWS	Azure	Google Cloud Platform
Cost Monitoring	AWS Cost Explorer	Microsoft Cost Management	Google Cloud Console Reports/Dashboards
Budgeting	AWS Budgets	Azure Budgets and Alerts	Google Cloud Budgets and Alerts
Optimization Recommendations	AWS Compute Optimizer, Trusted Advisor	Azure Advisor	Intelligent Cost Recommendations

While native tools are a solid starting point, they’re generally limited to single-cloud environments and offer basic customization.

Third-Party Solutions for Advanced Analytics

Third-party tools take cost management to the next level by offering multi-cloud support, deeper analytics, and advanced automation. These tools are invaluable for companies needing granular insights and more control over their cloud spending.

• CloudZero: Known for its per-unit cost tracking, CloudZero provides insights like Cost per Customer, Cost per Team, and Cost per Feature. For example, Drift saved $4 million in AWS cloud spend, and Ninjacat cut its cloud costs by 40% using CloudZero.
• Datadog Cloud Cost Management: This tool excels at granular cost attribution across multiple accounts. Stitch Fix’s Martin Amps highlighted how Datadog’s detailed spend tracking has led to significant savings.
• Cast AI: Specializing in Kubernetes cost optimization, Cast AI helped PlayPlay save $1,430 monthly by shifting workloads to more cost-efficient compute instances.
• CloudKeeper: This tool has delivered immediate savings for many organizations. For instance, Damstra reduced AWS costs by 12% initially, with an additional 10% saved through architectural improvements. Similarly, eLocal cut AWS costs by 10%, followed by another 15% reduction through further adjustments.

While third-party tools often come with licensing fees and require some integration work, they offer capabilities that go beyond what native tools can provide, especially for multi-cloud environments or specialized needs.

Custom Tools for Specific Needs

Custom tools are tailored solutions that address gaps left by native and third-party options. These can include dashboards, automation scripts, and integrations that align closely with your business requirements.

• Integrated Dashboards: Combine cloud cost data with performance and business KPIs for actionable insights.
• Automation Scripts: Automatically shut down non-essential environments during off-hours, leading to immediate savings.
• CI/CD Pipeline Cost Checks: Introduce cost awareness into your development process to catch expensive changes early.
• Custom Alerts: Set up notifications for specific metrics or thresholds unique to your business.

These tools don’t need to be overly complex. Even simple scripts and dashboards can deliver significant value by automating repetitive tasks and providing relevant data when it’s needed most.

Tim Ewald, CTO at Kevel, sums it up well:

"It’s not about tradeoffs between cost and performance: cost is a need, just as important as scalability and security. CCM has empowered engineers in our organization to understand this and act on cost data in the same way they would on performance, to maintain efficiency as we scale."

How to Measure Success and Keep Improving

Once your FinOps framework is in place, the next step is measuring progress effectively. This is critical because FinOps isn’t just about cutting costs – it’s about creating a system that consistently delivers value. Interestingly, nearly 49% of cloud-based businesses struggle with controlling cloud costs, often because they lack the right metrics to track their progress. Without clear measurements, it’s like navigating without a map – you won’t know if you’re on the right path, can’t demonstrate ROI, and might miss opportunities to optimize.

To truly succeed, you’ll need to focus on metrics that go beyond just cost reduction. It’s about gaining visibility into efficiency, accountability, and long-term sustainability. These elements ensure your cloud spending stays aligned with your business goals.

Key Metrics to Track FinOps Progress

Measuring FinOps success involves tracking both financial and operational metrics. Using S.M.A.R.T. KPIs (Specific, Measurable, Achievable, Relevant, Time-bound) can help turn raw data into actionable insights.

Cost Efficiency Metrics
One way to measure efficiency is by tracking cost per workload and cost per user. These metrics tie your cloud spending directly to business outcomes. For instance, if your cost per customer rises without a matching increase in revenue, it’s a red flag that something needs attention.

Utilization and Right-Sizing Metrics
Keep an eye on instance right-sizing rates and resource utilization percentages across your infrastructure. Low utilization often signals over-provisioning, while consistently high utilization might indicate it’s time to scale up.

Budget Variance and Forecasting Accuracy
Monitoring budget variance and forecasting accuracy is essential for minimizing financial surprises. The FinOps Foundation suggests specific variance thresholds based on your maturity level:

Maturity Level	Variance from Actual Spending
Crawl	Cannot exceed 20%
Walk	15%
Run	12%

Operational Performance Metrics
It’s also important to track application and network performance alongside Mean Time to Repair (MTTR). This ensures that your cost optimization efforts don’t come at the expense of system reliability.

By tracking these metrics, you can make sure every dollar saved is reinvested wisely, driving innovation and growth.

Practices for Ongoing Improvement

Improvement in FinOps isn’t a one-and-done task – it requires consistent effort and a systematic approach to embed cost optimization into your daily operations.

Regular Cost Reviews
Set up monthly cost reviews to identify trends rather than just looking at absolute numbers. Include teams from finance, engineering, and operations. For example, a sudden spike in storage costs might point to outdated data retention policies, while gradual increases in compute costs could signal a need for architectural adjustments.

Architecture Evaluations
Plan periodic architecture reviews to maintain cost efficiency while balancing other priorities like security, reliability, and performance. For instance, one Oil, Gas, and Energy client saved $50,000 per month by moving non-production backups from globally redundant to locally redundant storage.

Commitment Planning and Optimization
Evaluate your Reserved Instances, Savings Plans, and other long-term commitments regularly. A quarterly review can help ensure these align with your current usage patterns, allowing you to adjust as your architecture evolves.

Automated Scheduling and Policies
Use scheduling tools to automate shutting down non-production environments outside business hours. A manufacturing client saved over $100,000 annually by redesigning and optimizing manual processes with a FinOps blueprint.

Benchmarking and Industry Comparison
Compare your unit costs and efficiency metrics against industry standards for similar SaaS businesses. External benchmarking can uncover opportunities for improvement that internal reviews might miss.

Team Education and Culture Building
Invest in training programs and clear guidelines to embed cost-consciousness into your engineering culture. Using tools like a RACI matrix can clarify roles and responsibilities across your FinOps initiatives.

These practices not only strengthen your FinOps framework but also transform it into a strategic advantage. By integrating cost optimization into your operational rhythm, you set the stage for sustained growth and innovation.

Conclusion: Turn Cloud Waste into Growth Opportunities

Turning cloud waste into growth opportunities goes beyond just trimming expenses – it’s about making your cloud spending work smarter. By adopting a FinOps framework, you’re not just cutting costs; you’re creating a strategy that fuels innovation and supports long-term growth.

Here’s a striking statistic: 30% of SaaS spending is wasted on unused licenses and features, according to Gartner. Take CloudEagle.ai as an example. They analyzed a customer’s portfolio with $3.6 million in annual SaaS spend across 150 applications. Within just five months, they saved $450,000 by identifying underused tools, eliminating redundancies, and negotiating better vendor agreements.

"FinOps is where innovation meets accountability, bringing together engineering, finance, and product teams to lead responsibly at scale. Open collaboration is the engine of innovation, and we look forward to working with the FinOps Foundation community to continue advancing our innovation agenda in support of business growth."
– Keena Blunschi, Vice President of Technology, American Express

This quote highlights how FinOps fosters collaboration across departments, combining accountability with innovation. The real strength of FinOps lies in aligning IT, finance, and procurement teams to ensure SaaS decisions support broader business goals. It’s about creating a culture where every team understands their cloud spending, takes ownership of their usage, and makes informed decisions that benefit the entire organization.

A well-structured FinOps framework also brings predictability to your budget. By using cost tagging for visibility, automating usage tracking, and setting up clear collaboration guidelines, you can better forecast expenses and negotiate contracts more effectively. This level of control not only reduces waste but also frees up resources for growth-focused projects.

With worldwide SaaS spending projected to grow by 19.2% between 2024 and 2025, reaching $299.07 billion by 2025, a FinOps approach ensures your cloud investments scale in step with your business. Companies like Alchemy and Demandbase are already seeing results: Alchemy cut costs by 30% and achieved 90% faster fixes, while Demandbase reached 90% cost allocation with insights delivered 10x faster.

The path forward is clear. Start by tracking costs, secure some quick wins, and build a culture of financial accountability. The money you save today can become the fuel for tomorrow’s innovation.

If you’re ready to take the next step, TECHVZERO specializes in helping SaaS companies implement practical FinOps frameworks. Their approach typically uncovers 20–30% in savings while building sustainable FinOps capabilities. With their "Teach to Fish" method, you’ll gain quick wins and transform cloud waste into a powerful growth engine.

FAQs

What are the most common mistakes that cause cloud waste, and how can we prevent them?

Cloud waste often arises from allocating more resources than needed, leaving unused services running, and having limited insight into cloud usage patterns. Overallocating happens when businesses assign excessive resources, often because workloads aren’t fine-tuned for cloud environments. Similarly, forgotten or idle resources – like virtual machines or storage left running – can quietly inflate costs over time.

To tackle these challenges, focus on consistent monitoring and optimization. Use automation tools to manage resources, ensuring only what’s necessary stays active. Regularly review your cloud bills to identify underused services, and encourage teams to prioritize cost efficiency in their workflows. Treating cost management as an ongoing effort can help curb waste and redirect funds toward more impactful projects.

What’s the best way to implement a FinOps framework for lasting cloud cost optimization?

To put a FinOps framework into action and keep cloud costs under control, start by building a culture of cost accountability. This involves giving teams clear insights into their cloud spending and encouraging them to take charge of how they use resources. Cost awareness should become a natural part of the daily routines for engineering, operations, and finance teams alike.

From there, shift focus to actionable strategies like rightsizing resources, using reserved or spot instances, and automating cost management tasks. Make it a habit to review usage patterns regularly to spot idle or over-provisioned resources and address them promptly. Establishing a system for continuous monitoring ensures cost optimization is treated as an ongoing priority rather than a one-time effort.

Lastly, foster collaboration between finance and engineering teams to align cloud spending with the company’s broader business objectives. By combining quick, impactful changes with long-term process improvements, your organization can cut down on waste, stay within budget, and channel the savings into driving innovation and growth.

What are the best tools for managing cloud costs and building effective FinOps practices?

Managing cloud expenses and building effective FinOps strategies starts with having the right tools to monitor and control spending. Here are a few standout options:

• AWS Cost Explorer: This tool gives you a detailed breakdown of your AWS expenses. It helps track spending trends, set budgets, and pinpoint areas where you can cut costs.
• CloudZero: With CloudZero, you can dive deep into your cloud expenses, breaking them down by service, team, or project. It also provides actionable insights to help you trim unnecessary spending and optimize resources.
• nOps: This platform automates cost management for AWS, handling tasks like resource rightsizing and tracking commitments. It simplifies the process of keeping your cloud costs in check.

By leveraging these tools, teams can take charge of their cloud spending, minimize waste, and ensure their budgets align with broader business goals.

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