CloudZero launches first cloud cost benchmarking tool to help
companies drive cloud efficiency
BOSTON, Aug. 13,
2024 /PRNewswire/ -- CloudZero, the globally trusted
leader in proactive cloud cost efficiency, today released the
findings of its research report, "How Cloud Efficient Are Software
Companies In 2024?" From interviewing hundreds of cloud operations
and finance professionals, the survey found that most SaaS
companies lack maturity when it comes to cloud cost management
(CCM). That lack of maturity leads to increased costs and reduced
profit margins. The report is available for download here.
Additionally, CloudZero is launching the first-of-its-kind cloud
cost benchmarking tool to help SaaS companies understand how
efficient they are compared to their peers.
Cloud spending is expected to hit $675
billion this year, according to Gartner, and increased AI
adoption will drive spending even higher. Although organizations
continue to ramp up cloud spending, they're not getting more cloud
efficient. What's missing is a solid understanding of how those
costs tie back to business outcomes.
Key findings from CloudZero's report include:
- Most companies don't proactively manage cloud costs — just 39%
of companies have implemented formalized CCM programs.
- 73% of companies report that cloud service provider costs
represent at least 20% of their total cost of goods sold (COGS),
and 28% report cloud costs accounting for more than half of their
COGS.
- For nine out of 10 companies, at least 10% of their costs can't
be traced to the correct sources.
A lack of formalized CCM programs also means companies aren't
making the most of the advanced, powerful CCM approaches now
available — including complete or near-complete cost
allocation (just 9% say they're using this), cloud cost chargeback
(under half), and software code optimization (just 28%).
Additionally, organizations have struggled to calculate overall
cloud cost efficiency, complicated by a lack of an industry-wide
benchmark for this measure. CloudZero's new Cloud Efficiency Rate
(CER) is the industry's first unifying benchmark for cloud
efficiency for SaaS businesses. This report shows that top-quartile
CER is 92% — meaning that only $0.08
of every dollar of revenue goes to cloud service
provider(s). The finding underscores the positive financial
impact CCM can have.
Phil Pergola, CEO of CloudZero,
said, "For SaaS companies, the cloud is typically a top-three
budget line item — yet most don't have rigorous processes for
managing their cloud efficiency or understanding the relationship
to their unit economics at any level of granularity. Without it,
they're leaving a substantial amount of gross profit on the
table. By better understanding and managing their Cloud
Efficiency Rate, cloud-native organizations can improve their
profitability — impacting both the top and bottom line."
About CloudZero
CloudZero is the leader in proactive cloud cost efficiency. We
enable engineers to build cost-efficient software without slowing
down innovation. Our next-generation cloud cost optimization
platform automates the collection, allocation, and analysis of
cloud costs to uncover savings opportunities and improve unit
economics. We are the only platform that enables companies to
understand 100% of their operational cloud spend and take an
engineering-led approach to optimizing that spend. CloudZero is
used by industry leaders worldwide, such as Coinbase,
Klaviyo, Miro, New Relic, Nubank, and Rapid7. Visit cloudzero.com
to get started today.
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SOURCE CloudZero