Nathan Eddy, Freelance WriterMarch 24, 20255 Min ReadWavebreakmedia Ltd FUS1407 via Alamy StockCloud storage was once hailed as a cost-effective solution for businesses, but hidden fees and unpredictable costs are causing widespread financial strain.More than half of businesses globally have experienced IT or business delays due to unexpected cloud storage expenses, and 62% of organizations exceeded their cloud budgets last year, according to a report from Wasabia.As chief information officers and IT leaders reassess cloud spending, many are looking for new strategies to prevent waste, improve forecasting, and better manage their data storage policies.Soumya Gangopadhyay, technology strategist at EY, points to a lack of financial transparency and poor forecasting as key reasons why cloud costs spiral out of control. Certain issues arise when organizations dont track IT costs in a way that enables breaking out expenses to support analysis or forecasts, he says. Data egress fees, complex storage tiering, and sudden spikes in data processing all contribute to budget overruns.He cautions that without clear visibility into usage and cost structures, companies would struggle to predict expenses, leading to unforeseen financial burdens.Egress Fees, Over-Provisioning Drive Up CostsOne of the biggest financial pitfalls in cloud storage is egress fees, the costs incurred when transferring data out of a cloud providers ecosystem.Related:These fees, often overlooked in budgeting, can add up quickly and disrupt IT operations.Will Milewski, senior vice president of cloud infrastructure and operations at Hyland, notes businesses frequently underestimate the impact of egress fees. With regulatory shifts like the European Data Act prompting major providers to adjust these fees, organizations are still challenged by unanticipated usage that drives up costs, he says via email.He explains IT leaders can mitigate these impacts by consolidating data within a single ecosystem, employing intelligent tiering strategies, and utilizing data compression or deduplication techniques.Beyond egress fees, companies are also over-provisioning cloud resources, paying for storage they dont fully utilize.Many organizations, eager to embrace cloud agility, end up spending more than necessary due to a lack of integrated visibility across their data assets.Cost overruns often stem from over-provisioning, unpredictable data growth, and the complexity of managing diverse data workloads, Milewski says. By leveraging unified platforms, companies can streamline workflows, improve forecasting, and right-size storage needs.Related:The Challenge of Cloud Cost TransparencyWhile cloud providers offer cost management tools, many organizations find pricing models too complex to navigate effectively.Gangopadhyay explains some cloud providers obscure costs through complicated pricing structures, making it difficult for IT teams to plan accordingly. Not all providers offer robust tools for forecasting costs based on usage patterns, which is another factor organizations should consider when working with a cloud provider, he says.Milewski echoes this concern, pointing out that cloud providers are offering more AI-driven cost management tools, but expertise is required to use them effectively. Were seeing cloud providers introduce reserved pricing models, savings plans, and AI-driven cost dashboards, he says. However, many pricing structures remain complex, requiring organizations to build in-house expertise or partner with specialized vendors.Without dedicated cost management teams or external partners, businesses often struggle to fully optimize cloud spending.IT Leaders Take Control of Cloud CostsCIOs and IT leaders can execute several proactive measures as they look to regain control of their cloud budgets.Related:Gangopadhyay suggests implementing real-time monitoring tools, resource tagging taxonomies, and predictive analytics to improve cost forecasting. Organizations need to have a clear understanding or adherence to existing capabilities and performance -- without it, engineering workload performance can be a challenge, he says.By leveraging historical data and automating governance policies, businesses can eliminate waste and prevent unexpected cost spikes.Milewski advises companies to audit their storage policies and shift to a more strategic, tiered approach. Optimizing storage begins with aligning data policies to actual usage, he says. Prioritizing high-performance tiers for critical content while shifting less-accessed data to real solutions ensures cost efficiency without compromising performance or compliance.He also highlights automation and AI-driven insights as key tools for identifying redundancies and reducing expenses.Another crucial step is building a chargeback model that aligns IT costs with business strategy.Gangopadhyay says he believes organizations should implement chargeback mechanisms that assign storage costs to individual business units, making cloud expenses more transparent.Developing an enterprise chargeback strategy ensures that cloud spending is directly tied to business objectives, he says.By making business units accountable for their storage usage, companies can drive more responsible cloud consumption.The Future of Cloud Cost ManagementAs cloud storage pricing evolves, IT leaders must stay ahead of emerging trends to keep costs under control.Gangopadhyay says he expects increased competition among cloud providers, which could lead to more dynamic pricing models. We can expect to see more providers adopting real-time usage-based pricing and offering incentives for eco-friendly storage options, he says.Companies that embrace flexible budgeting practices and sustainable cloud solutions will be better positioned to navigate shifting cost structures.Milewski predicts that AI and automation will play a bigger role in optimizing cloud spending.The cloud storage landscape is evolving toward more dynamic, consumption-based pricing models, he says. Businesses will need to embrace FinOps practices, leveraging advanced analytics and automated tools, to adapt to these trends.FinOps, or cloud financial management, is becoming increasingly critical for organizations aiming to turn unpredictable expenses into predictable, manageable investments.Gangopadhyay stresses the key to reducing waste is aligning cloud costs with business goals.Reducing cloud expenses comes down to aligning business goals with business costs, he says. Organizations can better identify and eliminate unnecessary or redundant data by implementing automated policies, conducting regular audits, and establishing clear retention guidelines.Milewski underscores the importance of staying ahead of pricing trends and investing in cost optimization strategies.By leveraging automation, real-time monitoring, and AI-driven insights, companies can ensure that their cloud investments remain both strategic and cost-efficient.Businesses that combine modern infrastructure with intelligent cost management can empower themselves to navigate future challenges effectively, he says.About the AuthorNathan EddyFreelance WriterNathan Eddy is a freelance writer for InformationWeek. He has written for Popular Mechanics, Sales & Marketing Management Magazine, FierceMarkets, and CRN, among others. In 2012 he made his first documentary film, The Absent Column. He currently lives in Berlin.See more from Nathan EddyReportsMore ReportsNever Miss a Beat: Get a snapshot of the issues affecting the IT industry straight to your inbox.SIGN-UPYou May Also Like