PepsiCo’s ambitious cloud app migration strategy
PepsiCo has taken on the major task of migrating roughly 100 applications per year to the cloud—spanning multiple years and showing the scale and complexity of their digital transformation strategy.
Migrating such a large number of apps requires careful coordination between IT, finance, and business units to avoid disruptions to daily operations. Cloud migration has brought improved agility, better scalability, and a streamlined infrastructure to PepsiCo.
This drive has brought with it complex challenges, particularly around controlling and optimizing cloud costs, which have become central to the long-term success of the migration strategy.
PepsiCo’s cloud strategy is focused on managing their financial footprint in a more dynamic IT environment.
Each app adds to the cloud infrastructure’s footprint, and every instance or service comes with a cost. Monitoring and optimizing this expanding footprint has intensified as the company scales its cloud usage.
Why Pay-As-You-Go cloud costs can spiral out of control
One of the main challenges PepsiCo faces is the volatility of pay-as-you-go cloud models. While these models promise flexibility, they can also result in unexpectedly high bills.
Cloud providers offer countless services, typically charged on a usage basis, which can lead to cost spikes during periods of heavy usage or when new features are added. Over time, these charges accumulate, making it easy for costs to escalate.
The complexity of cloud billing often hides these costs until they become substantial.
With pay-as-you-go models, what appears to be small, incremental charges (such as pennies for individual services) can add up quickly—creating a perception of excessive spending, especially when the overall cloud bill is seen without proper context.
Managing these costs requires more than simply reducing expenses—it’s about making sure every dollar spent on cloud services delivers measurable business value, transforming what could be perceived as an overspend into an investment in innovation and efficiency.
How FinOps became PepsiCo’s subtle driver for cloud savings
PepsiCo adopted FinOps to tackle the inherent complexities of cloud cost management. FinOps, a cloud financial management framework, is designed to give companies like PepsiCo better visibility and control over their cloud spending.
At its core, FinOps integrates financial accountability into cloud operations, making sure that teams know exactly what they’re spending and why.
One key FinOps principle is breaking down and understanding the cloud bill. Cloud bills are notoriously complicated, often filled with countless small line items, making it difficult for teams to see where money is being spent.
PepsiCo tackled this by carefully categorizing cloud costs into three distinct buckets: direct, indirect, and shared.
- Direct costs: These are the simplest to manage. If a cost can be directly attributed to a single service or team, it is tagged and charged to that team’s budget. Teams are responsible for managing and eventually decommissioning services when they are no longer needed, making sure no resources are left running unnecessarily.
- Indirect and shared costs: These are more challenging because they involve multiple teams or shared resources. PepsiCo likens this to splitting a restaurant bill, where everyone wants to pay only for what they personally consumed. Finding a fair way to allocate these costs across users is a core FinOps challenge.
Direct, indirect, and shared expense cloud costs
For PepsiCo, direct costs are tied to specific, identifiable services or applications. It’s the easiest type of cost to manage, as it involves charging the responsible application team for any cloud resources they use.
Direct accountability incentivizes teams to manage their cloud usage efficiently.
Indirect and shared costs are more nuanced. These costs arise from shared services or infrastructure used across multiple teams, such as cloud storage or compute resources. PepsiCo needed to find a way to fairly allocate these expenses.
In many cases, shared resources are necessary, but without a clear allocation strategy, no one team would feel responsible for managing or reducing them. PepsiCo’s strategy is to make sure all users who benefit from a shared service contribute fairly to its cost, much like splitting a group dinner check.
Cloud spending optimization is a never-ending job
Keep an close eye on cloud costs or watch them skyrocket
PepsiCo’s cloud cost optimization is not a one-time effort. Cloud environments are constantly evolving, with new services being introduced and usage patterns changing frequently. PepsiCo recognizes this reality and continuously monitors its cloud usage to avoid unnecessary expenses and identify opportunities for optimization.
As PepsiCo’s IT Senior Director Kimberly Floss stated, “From a FinOps perspective, you’re never done.”
New services, projects, or expansions in the cloud mean that even the most optimized setup can become inefficient over time. Continuous oversight makes sure cloud costs stay aligned with business needs, ultimately making PepsiCo’s cloud infrastructure both agile and cost-effective.
Despite overspend fears, cloud investments are surging
Despite growing concerns about cloud overspend, global investment in cloud technology continues to rise. According to IDC’s forecast, cloud service provider revenues are expected to exceed $800 billion in 2024, driven by demand for applications such as generative AI. This market is expected to grow by nearly 20% annually through 2028.
PepsiCo is part of this trend, understanding that cloud investments are key for scaling business operations and boosting innovation. While there are risks associated with cloud spending, PepsiCo is focused on managing these costs efficiently, knowing that cloud technology will be central to its future growth.
PepsiCo’s cultural shift to take control of cloud spending
CIOs are owning cloud cost accountability
At PepsiCo, managing cloud costs has become a company-wide effort, with executives, particularly CIOs, playing a central role. Cloud is no longer solely an IT responsibility; it impacts nearly every part of the business—requiring greater executive oversight to make sure cloud usage aligns with business priorities.
A key part of this process is tagging, which links specific cloud resources to the teams that use them.
This provides clear accountability, making it easier to track cloud spending and allocate it to the right business units. While tagging is a key step in managing cloud expenses, it’s only the beginning. Executives need a deeper understanding of cloud strategy to drive meaningful financial and operational improvements across the company.
Changing the culture around cloud costs with FinOps
FinOps is central in reshaping PepsiCo’s organizational culture—encouraging collaboration between finance, IT, and other departments, instilling a sense of shared responsibility for cloud spending—making sure teams remain accountable for their cloud consumption.
For this culture shift to take root, leadership is key. Executives must prioritize cloud cost management and set clear expectations across the organization. This ultimately helps align cloud spending with PepsiCo’s broader business objectives, making sure cloud investments deliver maximum value.
How PepsiCo trains teams to excel in cloud FinOps
PepsiCo’s two-tier strategy to keep cloud costs in check
PepsiCo employs a two-tiered FinOps strategy that combines centralized governance with decentralized execution. At the core of this strategy is a centralized governance team that sets policies, develops reporting tools, and monitors key performance indicators (KPIs).
Decentralized teams are responsible for managing the cloud resources they use, making sure they have the autonomy to make decisions while remaining accountable to overall cost objectives. PepsiCo supports these teams with monthly consultations and tailored training programs, to help them stay aligned with broader cloud strategies.
Customized cloud cost training for every team
To make sure cloud cost management is effective across the organization, PepsiCo customizes its training programs based on the technical expertise of the team.
Technical teams receive in-depth, detailed guidance focused on optimizing cloud services at a granular level, while non-technical teams receive broader education on cloud usage and cost implications.
Why PepsiCo turned to third-party tools to manage cloud costs
PepsiCo chose Flexera for ultimate cloud cost control
PepsiCo selected Flexera as its primary FinOps tool, opting for a third-party solution that could be customized to meet their specific requirements. The decision was driven by Flexera’s ability to handle complex cloud usage scenarios, which is critical for a company as large and diverse as PepsiCo.
The choice to use a third-party tool like Flexera also saved PepsiCo from allocating internal resources to build and maintain a proprietary cloud cost management system. With competing priorities within the IT organization, building an in-house solution would have stretched resources and likely delayed implementation.
Why building an in-house cloud cost tool made no sense
PepsiCo considered the practicality of building an in-house cloud cost management tool and quickly realized that it wouldn’t deliver meaningful value. There was no business case for dedicating engineering resources to this task, especially when existing third-party solutions could handle the job more efficiently.
PepsiCo understood that developing a proprietary tool wouldn’t directly impact product sales or revenue growth.
Whether PepsiCo had its own cloud cost management tool or not, it wouldn’t influence consumer decisions to buy more Aquafina or Lay’s chips. The decision was clear: focus internal resources on areas that directly contribute to business outcomes while leveraging specialized third-party tools for cloud cost management.
PepsiCo’s cloud cost strategy is evolving – and it’s working
As cloud usage continues to expand, PepsiCo remains focused on managing these costs through a combination of third-party tools, structured training, and a company-wide cultural shift toward financial accountability. This ultimately makes sure cloud investments support long-term business goals while maintaining cost efficiency in a dynamic IT environment.
