Cloud infrastructure spend is a complex topic that requires collaboration between finance and technology leaders to manage effectively. In this blog post, we will explore the insights shared by Spencer Piland, CFO and COO, and Daniel Pickett, CTO, at FreightWaves, a leading provider of data and content for the global freight market.
As a finance leader, Spencer Piland initially found cloud infrastructure spend to be a black box. The dashboards provided by the infrastructure team didn't make much sense to him, and he struggled to forecast spend accurately.
According to Spencer, cloud spend cannot be viewed solely as a program expense. Instead, it should be considered a people expense that includes the cost of using your own engineers in addition to third-party vendors. This insight helped him understand the tradeoffs involved in optimizing cloud infrastructure spend.
Daniel Pickett, FreightWaves' CTO, recognizes that the company could probably cut their AWS/GCP spend by 50% if they threw enough data engineers at the problem. However, the tradeoff would be taking engineers away from critical new product development or feature enhancements that drive revenue.
To balance cost optimization with revenue generation, FreightWaves establishes a product roadmap with strong enough ROI against each roadmap item to justify the investment. While there may be some waste in cloud spend that can be eliminated, Daniel's team tries to minimize it by considering which cloud services they can de-provision or de-level. For example, they evaluate whether a backup for a stored dataset needs to be instantly retrievable with multiple backups or whether they can live with a 2-hour downtime.
Spencer and Daniel share a strong alignment around being fiduciaries for FreightWaves' shareholders. This culture of fiduciary responsibility permeates throughout the company and especially with the infrastructure team.
While it can be challenging for technology leaders to delegate their engineering architecture hat and learn to think in terms of the engineering team's impact on financial results, doing so helps them earn the CFO's trust. The dev teams at FreightWaves understand that controlling costs without impacting customer service levels increases the company's financial flexibility. This can later be used to buy new tools, give raises, or be a cushion against staff reductions if the company experiences temporary weakness in sales. As a consequence, the team routinely has architecture discussions that evaluate the tradeoffs between labor costs to implement/support and cloud platform costs of various options.
Managing cloud infrastructure spend requires a balance between cost optimization and revenue generation. To achieve this balance, finance, and technology leaders must collaborate and view cloud spend as both a program and people expense. Fostering a culture of fiduciary responsibility helps create alignment between the two teams and encourages tradeoff discussions to minimize waste while maximizing revenue generation.