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Cloud Governance: Frameworks, Best Practices, Benefits, & Challenges

Austin Fuller

11 min read

Last updated on May 15th, 2023 at 1:42pm

What is cloud governance?

Cloud governance is a defined set of rules and policies that dictates how a specific organization will operate services in the cloud.

Because the cloud is so expansive, cloud governance must consider finance, operations, security and compliance, data management, application performance, assets and configurations, and more to ensure organizations can realize the full benefits of the cloud in a responsible and secure manner.

As more and more organizations adopt the cloud, it is imperative that forethought be given to how a given organization will effectively and safely use the public cloud. The cloud makes it easier for teams and individuals to deploy assets and provision infrastructure at the press of a button.

This grants agility and new speed to innovation like never before; however, these new benefits of the cloud are accompanied by new risks that cloud governance aims to mitigate.

Why is cloud governance important?

A sound governance strategy will help organizations realize the full benefits of the cloud and avoid common pitfalls when migrating workloads to the cloud.

Reduces administrative overhead

One of the greatest hidden costs in any business is the time and effort spent on manual tasks. In the absence of a cloud governance strategy and the technical platforms and solutions to implement it, many facets of managing the cloud--like cloud accounts, costs, identity, and access–would be left to be performed manually, thus creating productivity bottlenecks and financial and security risks.

A well-governed cloud would include a platform to both define and apply policies across the entire cloud infrastructure to make it easier to control costs, access, and cloud resources.

Reduces shadow IT costs

Shadow IT refers to the use of information technology systems and services that are deployed by departments outside of the IT or security departments. This can open organizations of all sizes to unpredictable costs and security and compliance risks. Shadow IT typically occurs when employees are confused about how to acquire necessary resources or are not provided those resources fast enough. An effective cloud governance strategy will include a process for requesting cloud resources while maintaining organizational and security controls to ensure that the resources are used responsibly.

Improves cloud resource management

Many of the public cloud providers recommend a "multi-account" strategy. Amazon Web Services states "AWS best practices for a well-architected environment recommend that you should separate your resources and workloads into multiple AWS accounts."

Cloud governance can help to arrange systems into individual cloud accounts that represent departments, projects, and cost centers within the organization. This helps to track costs, manage access to resources, and prevent security issues.

Improves cloud security issues

A cloud governance model establishes a strategy for Identity and Access Management as well as outlining who should have access to what data to preserve confidentiality and availability of information. It allows the organization to map the various applications, resources, and individuals that have access to sensitive information and delivers visibility to ensure the appropriate security controls are in place.

Creating a cloud governance framework

A proper cloud governance framework will cover three distinct, yet interrelated areas: cloud operations management, cloud data management, and cloud financial management.

Cloud operations management

Cloud operations involve delivering, tuning, optimizing, and monitoring the performance of workloads in the cloud. Therefore, defining a cloud operations management process for the deployment of services is imperative.

This process should include:

  • Defining which resources should be allocated to particular service(s)

  • Defining and enforcing access controls to services and their associated resources

  • Ongoing monitoring to make sure resources are delivered

  • Parameters and requirements for deploying code to production

Well-executed cloud operations management is characterized by a lack of shadow IT and predictable costs with few unexpected spikes.

Cloud data management

The cloud brings the ability to store and process massive amounts of data and offers the flexibility to offer that data to the people, applications, and departments that need it; however, as the ability to collect data increases so does the complexity of managing it. This is why cloud data management is an essential facet of any governance strategy.

There should be clear guidance on how to manage all types of data. First, you will need a classification scheme to classify your data because not all data should be considered equal in terms of accessibility and confidentiality. For data in the cloud, the best practice is to encrypt all data in transit and at rest by default. Other controls and policies will be made based on the requirements and classification of the data.

Cloud financial management

Cloud costs are one of the more difficult things to predict about operating services in the cloud. The promise of the cloud includes a promise of lower costs but that is only true if costs are well managed and proper guardrails are put in place to prevent cost overruns and wasted spending. The three tenets of effective cloud financial management are:

Financial policies define things like which resources can be used for various projects and workloads, alert thresholds for budget consumption, and much more. These policies serve as the foundation for how you make financial decisions about your cloud resources.

Budgets define how much allowance a given project, department, or other entity is allotted and which cost centers they are allocated from.

Reporting on cloud costs is an essential part of any financial management strategy. Many cloud providers provide native cost reporting tools in their platforms but due to the complexity of many cloud environments, they may still have gaps. Adopting third-party tools to fill gaps in reporting across cloud accounts and cloud providers may be necessary and is an important consideration in your overall strategy.

What are the biggest challenges in cloud governance?

Cloud governance is difficult because of the large number of topics and areas to cover. In highly regulated industries it can also be difficult because of the necessity of adhering to multiple frameworks like NIST and SOC 2 for example.

It can be overwhelming to develop and implement a comprehensive governance strategy all at once. It is best to take an incremental approach. Every organization should take an inventory of their highest priority areas to address, create, and implement facets of their governance strategy to address the most important topics first.

Benefits of cloud governance and why it's required for cloud computing

Cloud governance helps to unlock the full benefits of the cloud while simultaneously helping to control costs, streamline operations, and mitigate security risks. The very nature of the cloud is fundamentally different from traditional IT in that there are no longer constraints based on hardware and infrastructure.

The cloud can almost infinitely scale, leading to a boon of benefits if properly harnessed but also introducing many potential risks. Mitigating these risks requires a different approach to governing and managing a traditional IT environment, hence the shift to implementing a holistic cloud governance strategy to architect systems and employ proper policies via automation to safely scale in the cloud.

Best practices for a cloud governance strategy

The following are best practices for each respective facet of a sound cloud governance strategy:

Operational Excellence

In order to move at the speed and scale the cloud can provide, cloud governance best practices dictate that all provisioning of infrastructure be through code instead of manual processes. This is known as Infrastructure-as-Code (IaC). This allows consistent, secure, and compliant resources to be created repeatedly and eliminates the risk of human error from repeated manual tasks.

Performance (Efficiency)

When looking to optimize performance, cloud governance should have policies that specify how to evaluate workloads for standardization on Platform-as-a-Service (PaaS) or continue to be operated under self-hosted infrastructure. PaaS moves many responsibilities to the cloud service provider while losing access, control, and transparency on the underlying infrastructure. If you have identified workloads that benefit from PaaS, standardize deployments of these workloads in your cloud governance policies.

Cost (Optimization)

Some organizations approach the cloud with the idea that they want to optimize their workloads as much as possible from the beginning; however, it is a better idea to take an iterative approach by first implementing basic cost management controls and reporting and then further optimizing after you have established a solid foundation.

It is recommended that you track spending by cost center and build a proper reporting structure to properly attribute spending. Once this is established, you can apply budgets and configure monitoring to alert involved stakeholders when their spending is outpacing their budget and even install guardrails to proactively prevent exceeding certain financial thresholds.

As you continue to mature in the cloud, you will be able to conduct rightsizing reviews to understand if the correct amount of capacity is being paid for, identify forgotten or unused resources to deprovision, and analyze where managed services would present an opportunity for savings over self-managed solutions.


Properly implementing the security facet of a cloud governance framework first lies in understanding where the cloud service provider's responsibilities end and the customer’s begins. Clearly defining which security operations are handled by either party can lead to a successful security implementation in cloud environments. Amazon Web Services has its Shared Responsibility Model for customers to reference.

Properly managing Identity and Access Management (IAM) is paramount to ensuring security in the cloud. IAM provides effective security for cloud environments by performing different security functions such as authentication, authorization, and provisioning of storage and verification. This ensures that you're enforcing policies of least privilege and that users only have access to resources they need to perform their essential tasks - and nothing more.

Top four reasons cloud governance is critical for every cloud services provider

1. Governance makes it easier to manage cloud computing resources

Leading cloud service providers like AWS advise customers to move multiple-tenant workloads residing in a single cloud account or subscription into their own distinct account. Using multiple accounts to manage distinct cloud workloads is considered a best practice today to deliver precise access control and cost management, and limit the security and financial blast radius in the event of an issue. An effective governance strategy can help organize the volume of accounts most organizations need and provide visibility around key cloud activities and trends.

2. Governance helps curb shadow IT

When you don't know what systems are in use - or where corporate data resides - your risk and spending increase. Employees turn to shadow IT when they are stalled or stymied in getting access to resources to do their job. Cloud governance helps put in place the required framework to easily request and access cloud computing resources, giving team members access to the breadth of allowed cloud resources within compliance and budget constraints. You reduce employee frustration and the likelihood of staff members using their personal cloud accounts out of convenience. And, in the process, you raise leadership confidence in the move to the cloud.

3. Governance reduces risk through cloud service providers

Whether it's exposed data, non-compliance with policies or regulations, or cost overruns, there are risks when operating in the cloud. A cloud governance solution can help ensure S3 buckets have proper controls to keep them private, your resource use is compliant with regulations such as HIPAA and FedRAMP, and spending is enforced so limits are not exceeded.

4. Governance reduces labor

Instead of having your team use spreadsheets and similar manual processes to track accounts, cost, and compliance, you can set guardrails at the appropriate point in your organizational hierarchy and have these guardrails control access, budget, and policy for the specified projects. In addition, complete governance solutions provide enforcement actions as well, allowing you to do away with necessary follow-up actions after you receive an alert. Preventing budget overruns and non-compliant activities saves time and effort. The result of labor savings is more time to focus on value-add, mission-delivering activities.

So, we've defined cloud governance, and we know why it matters. Now, how do you get to cloud governance? Based on our experience with customers, we identified three key pillars of cloud governance: automation and orchestration, financial management, and continuous compliance. We built Kion around these three pillars. In future blog posts, we'll take a detailed look at these pillars and the role they play in cloud governance.


There is no one-size-fits-all solution for cloud governance. Different organizations will have different best practices and regulatory requirements that influence their policies. What is clear is that organizations need to take a different approach to managing and governing their cloud compared to traditional IT.

Governance is not a one-time exercise and must be continually monitored and revised to ensure policies are enforced and controls are effective. It can be challenging to monitor, revise, and validate governance policies manually.

Kion offers a holistic cloud governance solution by combining cloud governance and management in a single platform to enable you to go farther, faster in the cloud. If you'd like to see a demo of Kion or learn more about how to implement cloud governance in your organization, speak with one of our experts.

About the Author

Austin Fuller

Austin has nearly a decade of experience in enterprise software and cybersecurity and is an AWS-certified cloud practitioner.

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