When it comes to talking about Cloud offerings, sometimes there are surprises lurking in the fog.  (Apologies to Bob, and his corny humor)

It won’t surprise you that there is an Intermediary, and they stand to do well. I am speaking of the big cloud infrastructure providers, and their desire to sell you undefined, but discounted software and hosting, through a general term known as Cloud Consumption commitments, AKA “committed use” or “committed spend”

These commitments are an enticing proposition—buy now, pay later, and get a discount.

So, what’s the catch with cloud commitments? Here are a few things you should watch out for:

• Long-term commitments: These contracts typically last several years, and if you need to exit early, expect to pay an unpleasant termination fee. Once you’re locked in, you’re in for the long haul.

• Auto-renewals: No one likes a surprise renewal charge. Some cloud providers sneak in auto-renewal clauses, ensuring you stay committed unless you explicitly opt out. (ugh).

• Usage monitoring and pricing escalations: Cloud providers will offer monitoring tools to track your usage, but be aware—if you go beyond your committed resources, you’ll likely face price escalations. It’s easy to start with great pricing, only to find yourself paying much more later.

• Hitting your spend target: Oddly enough, the challenge for many organizations isn’t avoiding overuse—it’s using enough of the services to meet the commitment.

In thinking about this, it reminded me of the Gift Card industry.   We buy gift cards because they are convenient, easy to use, and ultimately, expect that we will spend all of the money loaded on the card.  It turns out that a good number of gift cards are either never redeemed at all, or not fully redeemed, with some estimates being as high as 10-19%.  There is even a term for this, called “Breakage”.

Here’s where a little bit of strategic thinking comes in. Start by making sure you’re effectively managing budgets and usage projections. But there’s an even better trick—see if the cloud provider offers software you’re already using, or planning to deploy. Many software publishers have favorable agreements with cloud providers, meaning those tools could count toward your commitment. It’s a bit like discovering that your forgotten gift card can be spent on something you were already planning to buy.

This isn’t a perfect solution, but it’s certainly worth exploring. After all, if you’re locked into a multi-year agreement, you might as well get the most out of it. Just like using every dollar of that gift card, the key to cloud commitments is maximizing value while staying informed.