How a Cloud Cost Optimization Assessment Can Boost Your ROI

It can be a challenge to ensure that cloud spending translates into direct business value, partially due to costs not being adequately optimized in the cloud. According to TierPoint’s 2025 Technology and Modernization Report, only 29% of organizations find their current cost-saving efforts for cloud investments fully effective.

Businesses often struggle to maximize cloud ROI when faced with challenges such as overprovisioning, cloud sprawl, and paying for idle resources. These barriers highlight the importance of understanding current resource usage in the cloud, as well as opportunities for improvement. A cloud cost optimization assessment can arm businesses with knowledge about what they can do to eliminate waste, align spending with business objectives, and boost their return on investment.

What Is a Cloud Cost Optimization Assessment?

A cloud cost optimization assessment is a comprehensive review of an organization’s cloud environment with the goal of identifying inefficiencies, reducing unnecessary spending, and aligning cloud investments with business objectives. It analyzes cloud usage, pricing models, governance practices, and architectural decisions to uncover cost-saving opportunities and guide strategic optimization.

Rather than focusing solely on cost-cutting, a comprehensive assessment provides actionable recommendations that enhance financial accountability, performance, and scalability across cloud services. These may include rightsizing resources, applying automation policies, choosing the right pricing plans, improving tagging hygiene, and evaluating if workloads are architected efficiently.

Ultimately, the assessment empowers organizations to maximize the value of their cloud spend while enabling innovation, agility, and long-term financial sustainability – especially when conducted on an ongoing basis.

Benefits of Assessing Cloud Cost Optimization

According to Flexera’s 2025 State of the Cloud report, 27% of cloud spend is wasted. Although this percentage has decreased compared to previous years, it is still concerning, especially as cloud investments grow. Today, 33% of organizations spend over $12 million annually on public cloud, up from 29% in 2024.

Performing a cloud cost optimization assessment can help combat these rising costs and produce the following benefits.

Lower Operational Costs

When businesses reduce unused, over-provisioned, and underutilized resources, they can significantly reduce their monthly cloud expenditures and streamline their operations.

Improved Cloud ROI

Optimizing spending patterns, in part by uncovering both direct and indirect costs, ensures that each dollar spent results in maximum value for the business, increasing the return on investment (ROI) for cloud initiatives. 

Better Forecasting and Budgeting

Usage patterns and cost drivers become clearer post-assessment, which improves cost visibility and predictability. Organizations can forecast and budget with greater accuracy when they’re armed with more detailed and accurate insights. 

Closer Alignment with Business Goals

By reducing spending on inefficient resources, organizations can allocate more money to strategic initiatives. Leaders get the visibility needed to make decisions that best align with their business goals and drive faster growth.

Accelerated Innovation

Growth isn’t the only thing that can be accelerated with a cloud cost optimization assessment. Businesses can also innovate faster than before when their budgets allow for more investments in cutting-edge solutions and new technologies. This can help businesses gain a competitive edge in their industry without increasing IT budgets.

Key Components of a Cloud Cost Optimization Assessment

While each assessment should be personalized to an organization’s current cloud environment, there are five key components that a thorough cloud cost optimization assessment should contain.

Usage Analysis

A usage analysis starts with a review of all cloud services and workloads and their usage data. This can help uncover resources that are underutilized, unused, or provisioned inefficiently. This is a good starting point for finding “zombie” resources or oversized instances that can result in unnecessary expenses for a business.

Legacy lift-and-shift workloads may need deeper analysis to identify inefficiencies not present in cloud-native architectures.

Cost Allocation Review

Understanding where cloud spending occurs by department, project, or application is key to optimizing your cloud environment. Cloud tagging strategies can help companies attribute costs to specific departments or projects. This type of review will also evaluate the value derived from specific expenditures in comparison to their costs.

Pricing Model Evaluation

This part of the assessment focuses on how you currently pay for your cloud workloads. Specifically, it evaluates your use of key cloud cost models: on-demand, reserved instances, savings plans, and spot instances. Choosing the right pricing plan can significantly reduce costs, especially for predictable or long-running workloads.

For example, production environments with consistent usage may benefit from reserved instances or savings plans, which offer discounts in exchange for long-term commitments. Meanwhile, spot instances are ideal for fault-tolerant workloads like batch processing and testing, offering deep discounts for flexible compute needs.

A pricing model evaluation matches your workload characteristics, such as stability, criticality, and duration, to the most cost-effective commitment option, helping ensure you’re not overpaying for flexibility you don’t need.

Performance Evaluation

The performance evaluation assesses whether cloud resources are delivering the expected levels of speed, availability, and responsiveness, relative to their cost. This includes analyzing metrics like CPU and memory utilization, latency, and uptime to identify underused or overprovisioned resources. In some cases, it may also evaluate whether workloads are designed for scalability and efficiency.

The goal is to ensure workloads are right-sized and cost-effective while still meeting business performance requirements. In the process, the performance evaluation may reference best practices from frameworks like the AWS Well-Architected Framework, helping identify cost-performance risks across your environment.

Governance Analysis

Cloud governance policies should include guidelines for resource deployment, usage, and de-provisioning that minimize waste and optimize spending. A solid governance plan prevents over-provisioning and ensures that resources are aligned with business needs. This can be achieved through automated policies, such as turning off DevTest environments after hours, enforcing tag usage, and setting budget alerts to avoid overspend.

A strong governance framework is often guided by cloud FinOps principles, which bring together IT, finance, and engineering teams to collaborate on cloud financial management. This helps ensure that cloud resources are both technically efficient and aligned with business value and budget expectations.

Cloud Cost Tools to Guide Your Assessment

No cloud optimization assessment needs to start from scratch. Organizations can leverage cloud cost tools to guide and streamline their review. Cloud cost tools can provide centralized visibility, detailed analyses of cloud environments, and cost forecasting based on historical data. Plus, they can automate reporting while highlighting potential savings and areas for optimization.

Here are some examples of cloud-native cost tools from major cloud providers and other leading vendors: 

• AWS Cost Explorer: This tool enables businesses to see, manage, and understand their AWS costs and usage patterns over time. Teams can build custom reports, look at main cost drivers, and forecast future spending. 
• Microsoft Cost Management: Businesses that have cloud resources in Azure can analyze, optimize, and monitor Azure costs with this tool, which includes cost analysis reports, cost alerts, budgeting, and a recommendation tool to optimize services. 
• Google Cloud Billing Reports: Google Cloud’s billing reports allow organizations to view detailed charges, look at spending broken down by project, SKU, or service, and understand discounts associated with committed use contracts.

Multicloud cost management platforms, such as Flexera One or Tanzu CloudHealth by VMware, can create a unified view of spending across various providers for organizations in hybrid or multicloud setups.

Common Cloud Cost Optimization Strategies

Cloud cost assessments lead to actionable insights, allowing for the implementation of highly effective, tailored cloud cost management strategies. These comprehensive strategies may include rightsizing resources, leveraging reserved instances and spot instances, implementing auto-scaling, or even re-architecting your infrastructure completely.

Rightsizing Resources

Rightsizing involves understanding the actual compute, memory, and storage needs of your applications, and then adjusting your cloud resources to exactly match these requirements. This reduces or completely eliminates waste from overprovisioning. Organizations should consider this a fundamental and ongoing process in cloud cost optimization, but it’s most useful after initial deployments, when workload patterns change, and during regular review cycles, which may be done quarterly or monthly. 

Leveraging Reserved Instances and Savings Plans

Predictable, stable workloads with consistent resource usage can leverage reserved instances, which are purchased in advance for significant cost savings. Savings plans, like the Compute and EC2 Instance Savings Plans from AWS, offer similar discounts to customers who commit to spending a certain dollar amount annually for 1-3 years.

If your organization or project has steady resource needs, consider committing to a usage level upfront to reduce costs compared to on-demand resource pricing. This approach is generally most appropriate for production environments, core business applications, and consistent development workloads.

Utilizing Spot Instances

Businesses can also save money by purchasing spot instances for workloads that are more flexible and can afford to be interrupted. Customers can quickly bid on and buy this unused capacity at a steep discount. However, cloud providers can reclaim spot instances with little notice, so they are not appropriate for critical, continuous production workloads. 

Spot instances can be well-suited for non-critical data analytics, batch processing, and stateless web applications.

Implementing Auto-Scaling

Organizations that have workloads with variable demand should also implement auto-scaling, which allows resources to automatically adjust based on predefined metrics, such as CPU utilization and network traffic. This ensures performance remains optimal while businesses only pay for what they need. Auto-scaling works well for e-commerce businesses with seasonal sales, streaming services with variable viewership, or any other businesses that can experience unexpected spikes in traffic. 

Rearchitecting

Rearchitecting workloads can unlock long-term cost savings by adopting cloud-native services like serverless functions, managed databases, or containers. While more complex, this strategy is ideal during modernization efforts, cloud migrations, or when planning for scale.

Boost Your ROI with Expert-Led Cloud Cost Optimization 

Cloud cost tools are helpful but may miss context or strategic insights. Cloud optimization specialists with deep expertise in multicloud environments can uncover savings opportunities that internal teams may overlook. By leading a thorough cloud cost analysis, as well as offering continuous monitoring and ongoing recommendations, these experts can help your organization maximize ROI and streamline operations.

If you are looking for specialized expertise to navigate the complex cloud spend landscape, TierPoint can help. Our hybrid and multicloud experts offer a free cloud spend analysis for Azure and AWS environments with no commitment. This provides an excellent foundation for your initial cloud cost optimization and lays the groundwork for a more cost-effective and strategically aligned cloud environment.

Discover how our assessments have helped companies lower cloud spend by 20% within a month and learn more about getting a free analysis today.

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