48% used, 100% paid: how to fix the overspend on your cloud contract

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Here’s some good news: according to Infosys, over three-quarters of telcos say their cloud migration efforts have been “very effective” or “extremely effective,” delivering significant cost savings and improved performance. As the public cloud evangelist, I’m PSYCHED to hear this news. Woo hoo!

But there was another stat in the Infosys report that EVERYONE seems to be hyperfocused on, and that’s how these same telcos are using only 48% of their cloud commitments.

I have to say it: I’m not surprised. Take for example, me. I love my Amazon Web Services (AWS) rep, Jessica. She’s 💯 amazing. On the ball, Johnny-on-the-Spot whenever we need anything. I love her! But she also has one job: GET ME TO SPEND MORE ON AWS. And she’s really good at her job. Each year, about six months in advance of our AWS Enterprise Discount Program (EDP) renewal, she sets up a meeting with me to start negotiating next year’s commitment. She hits me up with questions like:

• Isn’t your DynamoDB spending going up because of Totogi? (Actually, yes!)
• Won’t you acquire more businesses this year that use AWS? (Also yes.)
• … and aren’t you planning to spend more on generative artificial intelligence (GenAI)? (Well, of course I am, thank you very much.)

You get the drift. She HATES IT when I tell her, “Well, Jessica, we actually plan to optimize our cloud spend and bring it DOWN, so we don’t really need to INCREASE our EDP.” (I actually tried this last year, and she wasn’t having it. She insisted that we renew at the previous level, which we did.)

Got a cloud sales rep like Jessica in your life? Not using your cloud commitment to its maximum? Here’s my 1-2-3 strategy to stop wasting money and make the most of your contract.

How to fix the 48% problem

If you’re using only half of your cloud commitment, you’re obviously leaving money on the table. Here are some ideas on how to fix it:

1. Migrate MORE to the cloud

Don’t slow-walk your move to the cloud. Migration itself usually requires extra cloud capacity during the transition, so use this opportunity to spend a little extra during the move. The sooner you migrate, the sooner you’ll see the benefits. Too many telcos take a cautious, piecemeal approach to migration, where they transform the application on premise THEN move it to the cloud. Since you have extra cloud credits, do the opposite: move it to the cloud, and transform the application there. You’ll have all the cloud tools at your disposal, and you’ll get it into the cloud-native model more quickly. You’re welcome.

2. Leverage AI workloads

Artificial intelligence (AI) and machine learning workloads are compute-intensive and perfect for using up excess cloud capacity. As you build your AI strategy, these workloads can help you make the most of your commitment while driving innovation. Start with proven use cases like customer service automation, network optimization, and predictive maintenance. These applications can deliver quick wins while helping you use your cloud resources more effectively. The hyperscalers will let you apply GenAI credits against your commitment as they are scrambling to count things towards “AI revenue.” Take advantage of this loophole AND get your team using AI.

3. Use your marketplace credits

Most hyperscalers allow you to apply your spending on partner “marketplaces” towards your commitment, but many organizations don’t make the most of this. This is literally leaving money on the table! For example, take my company Totogi. If you’re looking for a new charger, you could swap to Totogi’s Charging-as-a-Service and buy it via the AWS Marketplace. Whatever you spend with us eats into your cloud commitment. Consider experimenting with Totogi, using those extra cloud credits, and learning about a new tool. Plus, there’s a bonus to this approach: you just pay one bill—to AWS. It’s a win-win!

Once you fix it, don’t let it happen again

Once you go through the hard work of really understanding how much you should be spending on cloud, don’t let yourself get into this situation again. Here are three ways to ensure you keep your cloud costs to a minimum.

1. Build a strong optimization practice

Optimization isn’t a one-time event—it needs to be continuous. LIKE, ALL THE TIME, PEOPLE! I get it, DevOps teams are super busy—they are distracted by the day-to-day demands of their jobs and continuously put the tedious work of optimization on the back burner. And some may shy away from optimization work because they’re afraid they’ll break something. The best way to make sure it gets done is to create a dedicated team focused on optimization, or at a minimum, to assign clear ownership of ongoing optimization initiatives. If your team isn’t getting it done, then splurge and get outside help to get it done.

2. Stay on top of new services

Cloud providers are constantly releasing new instance types and services that are cheaper and more efficient than their predecessors. In just the past year, we’ve seen dramatic price reductions in storage, compute, and AI services. Your team needs to be knowledgeable about these changes and quick to adopt cost-saving innovations. Don’t expect them to automatically be good at this; this skill requires a mix of technology and economics (something that hasn’t really been a job requirement during the on-premise days). Subscribe to cloud provider updates, attend their events, and maintain regular contact with your account team to stay informed about new opportunities.

3. Get expert help

If your team isn’t doing it on their own, get outside help. I had to do this with my own team when they kept focusing on new features and not cost optimization. I brought in cost-optimization consultants Virtasant and the cost-optimization tool CloudFix, which shaved millions off our AWS bill. (I bet Jessica’s not happy about that!) Follow my move and use these experts to help you identify savings opportunities your team might miss and implement best practices from across the industry. They can also help your team build internal capabilities so you can eventually manage optimization on your own. 

Preparing for future negotiations

Now that you’re using all your commitments, optimizing as you go, you’re ready to face Jessica and her upselling tactics to get the best deal for your organization and level of cloud use.

1. Start early

Start preparing for renewal negotiations six months in advance (especially if you have a strong sales rep like Jessica!). Your hyperscaler is not going to take your word that your usage will soon be optimized. It will base discounts and pricing on your actual usage. You’ll need time to gather data and PROVE that your spend level is going down. Review your usage patterns, growth projections, and optimization opportunities well before you sit down at the negotiating table. This negotiation should be the LAST step in your cost optimization process, not the first step.

2. Stop over-provisioning

If you’re optimizing effectively, resist pressure to over-provision “for a rainy day.” In the on-premises days, yes, you had to over-provision for capacity because it took months to get new hardware in the door and set up. In the cloud world, it takes SECONDS. Scope down the capacity needs and pay just for overages as they happen. You can always INCREASE your cloud commitment, but you can’t decrease it once you’re locked in.

3. Build strong relationships

Take the Jessica in your life out to dinner! Build rapport. While reps are tasked with growing revenue, good reps can be invaluable partners in helping you navigate the cloud ecosystem and access resources. They can connect you with solution architects, help you access preview features, and advocate for you internally. A strong relationship with your rep can be worth its weight in gold when you need support or flexibility. Jessica has been a great partner for us, helping me to navigate the AWS organization and find the people we need when we need help. 

Making the most of your commitment

Remember: Cloud success isn’t about how much you spend—it’s about how effectively you use what you’ve committed to. With proper planning, continuous optimization, and strategic use of marketplace solutions, you can turn that 48% utilization into 100% business value. The cloud is an investment in your future, but like any investment, it needs active management to deliver the best returns.

Want to learn more about cloud optimization? Check out episode 102 of my Telco in 20 podcast featuring Brandon Pizzacalla, CEO of CloudFix. We dive deep into how telcos can optimize their cloud spend and discuss why continuous optimization is crucial for cloud success. And here’s some great news: TelcoDR has negotiated a special CloudFix discount just for telcos. So, give me a call! I’d love to help you build a cloud strategy that delivers real value for your business.

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