CLOUD COST SURVEY REPORT

Cloud Cost Report 2023

Top FinOps trends for 2023 based on market research and data of
over 1000 Anodot customers.

Learn about top challenges, AI in FinOps, speed of anomaly detection
and more!
Summary
Our clients show:

The public cloud is like a powerful catalyst for businesses, offering

considerable benefits in scalable infrastructure, elastic services,
speedy innovation, flexibility, and cost savings.

84%
Faster

Companies looking to differentiate themselves from their competitors detection time
accelerate cloud transformation. According to Gartner, worldwide
end-user spending on public cloud services is forecast to grow 21.7%

45%
to $597.3 billion in 2023, up from $491 billion in 2022.

With enterprise innovation using emerging technologies like data-

heavy generative AI, the global cloud footprint is about to skyrocket.
Consequently, the cloud AI wars have officially begun in 2023, with all Reduced

major cloud providers ‌capitalizing on generative AI with their own cloud costs
services.

55%
Measure

unit economics

© 2023 Anodot Cloud Cost Report 2023 01

Report Overview

The Anodot 2023 State of Cloud Cost survey, conducted in June 2023, encompassed a general market

survey and an analysis of the company's customer data. The survey evaluated the impact of mature FinOps

platforms on cloud spend control, time to detection of cost anomalies, realized cost savings, easiest-to-use

optimizations, and their influence on total cost savings.

Key findings:
Top challenges continue to be visibility into usage and cost,
01
normalizing complex billing data, and managing multi-cloud

environments

FinOps platforms are becoming increasingly popular with

02 organizations, with more than half of respondents reporting using

third party solutions to allocate direct and shared costs to business

units — up from 38% last year

Despite the growing adoption of FinOps and awareness of cloud

03
waste, 20% of respondents still did not know the extent of their

cloud waste

Over 45% of Anodot customers reduced their cloud spending

04
through proactive cost optimization initiatives, enabling them to scale

their cloud adoption at the same or lower cost

0 5 Over 80% of Anodot clients detect anomalies immediately or within

a few hours

We’ll cover each of these findings - and more! - in more detail in the sections to come.

© 2023 Anodot Cloud Cost Report 2023 02

cost visibility

Top challenge continues to be visibility


into usage and cost
FinOps reports, dashboards, and insights are the product of a FinOps practice. To make informed decisions
across all their cloud environments, cloud stakeholders need timely access to detailed usage, utilization,
and cost data. 

Visibility into usage and costs, normalizing complex cloud billing data, and managing complex multi-cloud
environments remain the top three challenges among respondents this year.

These three issues are closely related. As the complexity and scale of your cloud environment increase,
particularly for multi-cloud environments, it becomes more difficult to gain visibility into every aspect of
cloud usage and appropriately allocate costs. Establishing comprehensive visibility and cost allocation
requires a carefully crafted account and tagging strategy that combines tags, accounts, folders, and labels
— which differ from one cloud provider to another. Complex, proprietary billing data and varying pricing
models among providers make it even more difficult to normalize data and reconcile costs. Additionally,
siloed engineering teams, which focus on speed and innovation, control cloud spending, making it one of
the most expensive cost centers for modern organizations.

What are your top FinOps challenges?*

Lack of visibility
61%

Complex cloud pricing 54%

Complex multi-cloud environment 51%

Forecasting and budgeting 31%

Alerts and anomaly detection 23%

*Respondents could select all that apply

© 2023 Anodot Cloud Cost Report 2023 03

unit economics

Most organizations want to measure


unit costs but don’t
Unit economics metrics enable engineering teams to measure the business value of cloud spend and make

data-driven decisions in FinOps. According to our market survey, 70% of respondents said they wanted to

measure unit economics metrics but were not there yet.

Of the 30% that manage to measure unit costs, the vast majority, 65%, do so automatically with a tool they

built in-house (45%) or a 3rd party solution (25%) such as Anodot. The remaining 35% rely on manual

processes that use a combination of tools or spreadsheets to calculate their unit economics metrics.

There is not a single metric that the whole organization should follow.

Organizations with simple structures and a single SaaS product, can use

a top-line unit metric like cloud cost per customer (33% of respondents).

30% While organizations with complex structures and multiple product

offerings will often have to use multiple unit metrics, each one relevant to

a specific product line (e.g., cost per feature; 27% of respondents),

application (e.g., cost per transaction; 23% of respondents), or service

Measure
 (e.g., cost per execution of microservice; 17% of respondents). 

unit economics

Business metrics are important because they allow you to move from

talking about cloud cost to talking about efficiency and value.

Learn more about leveraging unit economics to boost your FinOps.

© 2023 Anodot Cloud Cost Report 2023 04

unit economics

Complexity of unit economics can be


a barrier for implementation

How do you measure unit economics?

40% Using a 3rd party tool

Using an in-house tool

25%

Manually using

spreadsheets

20%
15%
Manually using a combination

of tools

“Implementing unit economics metrics can be a complex process,

especially for customers with diverse product offerings or complex

structures. It may require integration with various systems, data

collection mechanisms, and the development of custom tools or

solutions. The challenges associated with implementation might be

deterring organizations from measuring these metrics. The fact that

a significant percentage of organizations that measure unit costs

(65%) do so with an in-house tool they built, or a third-party

solution might indicate that existing off-the-shelf solutions may not

fully meet the specific needs and complexities of each customer's

cloud environment.”

Adi Mor Yosef

Head of Customer Success at TeraSky

© 2023 Anodot Cloud Cost Report 2023 05

cost allocation

More and more companies are using


third-party solutions to manage cloud spend
When choosing between native tools, building your own, purchasing a third-party tool, or a hybrid approach
(e.g., buying and augmenting with homegrown tools), there is no definitive solution. Each organization is
distinct, with its own resources, culture, and skills—every approach involves individual tradeoffs.

Most organizations use a mix of tools and approaches, which evolve as their maturity grows and cloud
usage changes, to allocate and manage their cloud spend. 

Over half of the respondents reported using third-party solutions to allocate direct and shared costs to
business units, up from 38% last year, indicating that FinOps platforms are becoming increasingly popular
with organizations. 

FinOps platforms save time by providing enhanced visibility, cost allocation, reporting, and optimization
wins, allowing organizations to focus on the cultural aspects of FinOps. They also handle integrating multiple
cloud providers, normalizing billing data, mapping spending, and adjusting discounts, credits, and
amortization.

How do you allocate direct and shared costs by business unit?*

Using a 3rd party tool 51%

Power BI and Quicksight 14%

Manually using spreadsheets 15%

Native tools 29%

*Respondents could select all that apply

© 2023 Anodot Cloud Cost Report 2023 06

g r ow i n g c lo u d c o s t s

Companies are still wasting money


on the cloud
Many organizations implement public cloud deployments in an ad hoc manner. Industry estimates indicate

that redundant, overbuilt, or unused cloud resources waste approximately one-third of public cloud

expenditures. This wasted spend increases operating costs, negatively impacting profitability, and directly

contradicts the purpose of the cloud, as it provides no value to the business.

In our survey, 67% of respondents stated that less than a third of their cloud spending is wasted, up from

56% last year, indicating improved FinOps adoption and growing awareness of cloud waste. Additionally, a

fifth of respondents don't know what cloud waste they have, showing that there is still much work to be

done.

To cut down on cloud waste, it's crucial to have visibility and measure it. Unfortunately, native tools often fall

short of providing real insights and usage data. Plus, they're limited to one platform, making it tough to

gather meaningful metrics across multiple clouds. Cloud practitioners and FinOps teams can improve

inefficient and unreliable cloud infrastructures for better efficiency, resilience, and cost-effectiveness.

How much of your cloud costs are wasted?

Less than 10%

17%

10-20%
13%

21%

21-30%

20% 31-40%

29%
Don’t know

© 2023 Anodot Cloud Cost Report 2023 07

g r ow i n g c lo u d c o s t s

Cloud costs are on the rise,


but less so for Anodot customers
Businesses often require assistance in managing their increasing cloud expenses as they speed up their

cloud transformation to stand out from competitors. As per Flexera's 2023 State of the Cloud Report, a

whopping 82% of companies claim that controlling cloud spend is their biggest challenge, surpassing

security for the first time. This shift highlights the mounting demand for broader FinOps adoption,

encompassing advanced FinOps tools and proactive cost optimization approaches.

Companies practicing FinOps and focusing on cloud optimization can maximize their cloud investments,

often achieving more with fewer resources. We analyzed our customer data to see how it compared to

Flexera's data set and discovered that almost half of Anodot's customers increased their cloud spending by

more than 10% in the last 12 months. But more importantly, over 45% of Anodot’s customers reduced their

cloud spending through proactive cost optimization initiatives, enabling them to scale their cloud adoption

at the same or lower cost.

Check out our FinTips to learn how to reduce your cloud costs.

How did your Cloud Costs change from last year?*

10%
21%
Reduced

23% Grew by less than 25%

Grew by 25%-40%

Grew by over 40%

46%

*Based on Anodot customer data

© 2023 Anodot Cloud Cost Report 2023 08

Proactive cost optimization

Proactive optimization helps identify savings

opportunities early
Proactive FinOps teams identify cost-saving opportunities early on by partnering with technical teams,
reducing costs through architectural changes. Introducing financial constraints early helps avoid wasted
effort and frustration later.

Today, more than ever, organizations need to be

proactive regarding optimizing cloud costs in order to
make sure their business needs are met at the lowest
spend possible. Automat-IT leverages Anodot Cost in
order to do exactly this for hundreds of customers,
mainly startups, which can greatly change consumption
patterns within a short time. By using Anodot Cost’s
anomaly detection feature, Automat-IT and our
customers can swiftly identify and address unusual
spikes, resulting in substantial cost savings. Combining
cost optimization and anomaly detection allows our
customers to proactively manage cloud costs, and
quickly respond to irregularities. This both improves the
overall financial performance and saves resources and
time.
Tomer Perets
FinOps Team Leader at Automat-IT

© 2023 Anodot Cloud Cost Report 2023 09

Proactive cost optimization

Most companies are still reactive


in their FinOps
Proactive cost optimization may require some investment of time and resources, but it's totally worth it in
the long run. Plus, with third-party tools like Anodot, you can save big on the tool costs and still enjoy the
benefits!

Achieving excellent FinOps demands proactive optimization efforts from FinOps teams. However, our market
poll revealed a startling fact: 60% of respondents feel they lack the time or capacity to proactively monitor
cost increases. On a brighter note, when we surveyed Anodot customers, a resounding 80% described their
cost optimization efforts as proactive.

Are your cost optimization efforts as proactive or reactive?

Proactive

Reactive

© 2023 Anodot Cloud Cost Report 2023 10

Proactive cost optimization

Anodot customers realize significant


savings with proactive cost optimizations
FinOps focuses on optimizing cloud usage: maximizing efficiency while minimizing wasted spend. Teams
must proactively identify opportunities for more effective spending through usage and rate optimization,
while also tracking savings for ROI calculations.

Since Anodot provides such capabilities, we analyzed our customer data to see how much savings our
customers realized by investing in a FinOps. Our data revealed over 60% of customers saved more than 5%
of the annual cloud spend through cost optimizations in the last 12 months. Additionally, over 40% saved
more than 10%, and over 20% saved more than 20%.

It is crucial to acknowledge that organizations that do not embrace FinOps principles or utilize advanced
FinOps platforms (such as Anodot!) may not realize comparable cost savings. In fact, they may even incur
increased expenses due to the decentralized nature of cloud operations.

“Although it requires time and resources, a proactive

approach to cost optimization efforts will end up paying
for itself. Third party tools will help significantly reduce
the time invested and the ROI resulting from savings
should cover the cost of these tools.”
Melissa Abecasis
Director of Customer Success at Anodot

© 2023 Anodot Cloud Cost Report 2023 11

P r oac t i v e c o s t o p t i m i z at i o n

The easiest-to-implement optimizations


also have the most impact
The goal of FinOps is not necessarily to reduce costs, but to identify opportunities to spend more

effectively. Avoid sacrificing innovation to cut costs. Commitment-based discounts can be centrally

managed by the FinOps team, while resource rightsizing and idle resource termination are best handled by

decentralized engineering teams.

We analyzed our customer data to determine which types were easiest to implement and which had the

greatest impact on cost optimization. Our data revealed that the easiest-to-implement optimizations also

have the most impact on cloud spend.

Which has saved you the most money?*

Commitments

Idle Resources
42%

42% Rightsizing

Upgrading the Generation


of Resources
11%
3%

Other
1%

*Based on Anodot customer data

© 2023 Anodot Cloud Cost Report 2023 12

a n o m a ly d e t e c t i o n

Cloud cost anomalies are increasingly


being identified with third-party tools

Even small changes in your cloud bill can add up fast, resulting in a "death by a thousand cuts." For most

companies, it can take anywhere from a few days to a few months to spot an unexpected surge in cloud

costs.

Our market survey found that 46% of respondents used native cloud tools to identify cloud cost anomalies—

while 32% and 16% used third-party and in-house tools, respectively.Regrettably, a staggering 20% could

only spot a cost anomaly after receiving the bill.

Additionally, one in eight respondents reported using more than one tool, with native and third-party tools

being the most popular combinations.

How do you identify cloud cost anomalies?*

Native

3rd party

tools tools

46% 32%

Post

In-house

billing
tools

22% 16%

*Respondents could select all that apply

© 2023 Anodot Cloud Cost Report 2023 13

a n o m a ly d e t e c t i o n

Anodot customers outperform


the market in time to address anomalies

Early detection of anomalies enables swift resolution, avoiding unexpected billing issues. ( Please note: our

market survey did not assess awareness of anomalies). According to FinOps Foundation’s The State of

FinOps 2023 report, the 2023 data (17% of respondents could detect anomalies within hours) indicates that

respondents continue to experience similar competency and reactiveness to cloud cost anomalies as they

did in 2022 (18% of respondents).

In a recent survey of our Anodot customers, an impressive 80%+ revealed their ability to spot anomalies

swiftly - in mere moments or within a few short hours. This highlights the immense value of real-time

anomaly detection powered by machine learning. Imagine the power to identify irregularities in cloud

spending and usage swiftly! By delivering contextual alerts to the right teams, issues can be resolved in a

flash.

How long does it take you to notice cloud cost anomalies?

84%

50%

17%
14%
2% 11%

Hours Days Weeks

© 2023 Anodot Cloud Cost Report 2023 14

g e n e r at i v e A I

Generative AI will impact FinOps


on multiple fronts

With the recent buzz around generative AI tools like OpenAI ChatGPT and Amazon CodeWhisperer, we

conducted a market poll on the impact of such tools on FinOps.

Of respondents believed generative AI tools would eliminate the

24%

need for FinOps experts and tools.

Of respondents stated that these tools would have limited or no

24%
short-term impact on FinOps, considering either the nature of

FinOps or the technology's maturity.

Of the respondents said that generative AI tools will augment

48%
FinOps teams, enabling them to optimize their infrastructure

better and spend.

“Generative AI tools will impact FinOps by enabling business users to

ask natural language questions about their Cloud Costs and respond in a

way that is familiar to them. For example, we could use questions

aligned with business acumen such as ‘How much is application X

costing me,’ or ‘What can I do to reduce spend across my environment.’

This will enable both current and future state opportunities to maximize

the value of a hyper-scale environment with financial and technical

guardrails in place. Another use case for Generative AI is to be a virtual

assistant for the current FinOps and engineering team. Utilize it as a tool

to allow them to be more productive and understand complex aspects of

Cloud billing. For example, if my bill spikes in a Cloud or PaaS service,

the ability to contextually understand what an alert is for and how it can

be remediated will continue to make FinOps teams more effective.”

Sean Donaldson

CTO at Protera

© 2023 Anodot Cloud Cost Report 2023 15

g e n e r at i v e A I

Generative AI will impact FinOps


on multiple fronts
We at Anodot—a leading developer of advanced AI and machine learning models for forecasting, anomaly

detection, and recommendations—believe generative AI will help FinOps teams be more productive and

proactive sooner rather than later.

But data-heavy generative AI will also impact FInOps from a cloud footprint perspective. With more and

more organizations wishing to create their own generative AI walled gardens that don’t expose proprietary

information to publicly available models, their cloud footprint will grow exponentially.

The battle for cloud AI supremacy is underway, as major providers unleash the power of generative AI

through their cutting-edge offerings. Think Google Vertex and Generative AI Studio, Microsoft Azure OpenAI

Service, and Amazon Bedrock - each vying for dominance.

Furthermore, AWS recently dropped a bombshell: a whopping $100 million investment to foster collaboration

between machine learning experts and their customers, turbocharging enterprise innovation through

generative AI.

Staying ahead of the curve of the AI revolution, Anodot launched CostGPT, becoming the first company to

bring genAI into the Cloud Cost space. CostGPT is a cloud cost companion that can effortlessly answer

users’ cloud cost questions, providing actionable insights supported by comprehensive data visualization.

© 2023 Anodot Cloud Cost Report 2023 16

Drive FinOps success with Anodot

Anodot is the go-to FinOps platform specifically designed to measure and drive success in cloud financial

management. It grants organizations full visibility into KPIs and baselines, offers advanced reporting

capabilities, and provides savings recommendations to help control cloud waste and enhance cloud unit

economics.

With Anodot, anyone can understand the true cost of their cloud resources, find ways to reduce cloud costs

with advanced recommendations and make data-driven decisions to get the most out of their cloud

investments with easy-to-use explanations.

Here are some of the standout features:

Anodot's Recommendation History: Automatically tracks realized savings opportunities for

easy ROI calculation. With Exclusion History, your FinOps team can even show stakeholders

what they missed out on when they rejected recommendations.

Adaptive, AI-powered forecasting, budgeting, and anomaly detection: Empowers your team to

avoid costly mistakes and continuously manage cloud spend with the highest degree of

accuracy and relevance, so the right people are automatically alerted to act when needed to

keep your cloud investments on track.

Anodot's forecasting: Accurately predict future costs, enabling Finance and Procurement to

better negotiate long-term discounts with cloud providers. Using only two months of historical

data, it can produce a one-year forecast with 95% accuracy. Anodot can even forecast

serverless and container spend with the same level of accuracy as traditional cloud workloads.

Anodot is renowned for normalizing billing across cloud providers. With its granular delivery and fast

awareness of cloud spend, along with the ability to correlate spending by application across vendors,

Anodot simplifies multi-cloud visibility and accountability for your FinOps team.

Unlock your organization's FinOps journey with Anodot! Empower FinOps practitioners to maximize cloud

value and foster a culture of cost awareness, all without adding operational complexity or burdening

engineering. Let's redefine the way you navigate the cloud together!

© 2023 Anodot Cloud Cost Report 2023 17

Learn more at:

anodot.com/cloud-cost-
management/

Book your demo

© 2023 Anodot 



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