Cloud Costs: 5 Proven Frameworks PE and VC Fund Managers Use to Maximize Shareholder Value

Cloud costs are quietly destroying portco returns, and most fund managers have no idea how much value is sitting untouched inside their portfolio companies’ infrastructure bills.

Ryan Miller BSc., MFin. | Host, Making Billions Podcast | LinkedIn

Key Takeaways

• Understand how cloud costs function as the second-largest line item at technology portfolio companies, making them a critical area of focus for fund managers seeking to protect and grow portfolio value.
• Learn how fund managers can consider cloud costs optimization as a due diligence tool, giving them a potential edge in competitive deal processes by uncovering hidden savings before an offer is made.
• Discover why building a forward-looking operating model before acquisition, not based solely on benchmarks, is a foundational discipline that shapes how cloud costs and other expenses are managed post-close.
• Explore how clear and transparent communication of the investment thesis to operators at every level of a portfolio company, including the engineering teams managing cloud costs, is essential for executing a value creation plan.
• Understand why authenticity in leadership is not a soft skill but a strategic decision that fund managers and operators can use to build trust and remove hidden friction inside portfolio companies managing cloud costs and other operational challenges.

Cloud Costs: The Hidden Eroder of Portfolio Returns Every Fund Manager Should Understand

Cloud costs represent one of the most significant and least understood value leakage points inside technology-enabled portfolio companies today. In this episode of Making Billions Podcast, host Ryan Miller sits down with Claire Milligan, CEO of Aimably, a software company that helps Venture Capitalists and Private Equity fund managers identify and reduce cloud costs across their portfolio companies. The conversation opens with a foundational observation: fund managers invest because they believe they can add value, and understanding where operational waste lives, including in cloud costs, is part of fulfilling that promise.

According to Claire Milligan, cloud costs at technology businesses are typically the second-largest line item after personnel. That single data point repositions cloud costs from a back-office IT conversation into a front-line investment strategy discussion. For fund managers overseeing technology portcos, this means cloud costs deserve the same analytical attention as headcount, margins, and revenue growth.

The episode makes clear that cloud costs are not fixed or unavoidable. They are a variable, negotiable, and improvable element of a portfolio company’s financial profile, and one that most fund managers and even most CFOs have historically treated as a black box. Understanding this distinction is the first step toward a more disciplined approach to operational value creation. The SEC’s framework on capital markets education reinforces that operational transparency and financial discipline are foundational elements of sound investment stewardship.

Cloud Costs: What Aimably Does and Why It Matters for Fund Managers

Cloud costs optimization, as described by Claire Milligan in this episode, operates through two distinct service lines at Aimably. The first is ongoing cost savings, and the second is due diligence support. Both are designed to give fund managers and their portfolio companies a clearer, more actionable view of their cloud costs and how those costs can be restructured to serve investing objectives.

On the cost savings side, Aimably works with portfolio companies to identify wasteful cloud costs, including servers running continuously when they could scale dynamically, test environments left running, and infrastructure not structured to expand and contract with actual user load. According to Claire, the running average savings Aimably has identified is just south of 45 percent, with a range spanning from a floor of 20 percent to a recent engagement where 88 percent savings were found. These figures are presented as historical outcomes from specific engagements and are not representations of what any future client should expect.

The due diligence offering addresses cloud costs at the pre-acquisition stage, delivering a comprehensive snapshot of a target company’s cloud infrastructure within 24 hours. As Claire explains in the episode, this snapshot gives fund managers visibility into where a target is spending on cloud costs, the maturity of their cloud operations, and the potential savings that could be accessed post-acquisition. That information, she notes, can influence how much debt a fund is comfortable taking on, how competitive an offer can be structured, and what the post-close operational playbook should look like. Investopedia’s overview of due diligence highlights that operational financial analysis is an increasingly important component of pre-acquisition review in private equity.

Cloud Costs: The Auto-Scaling Principle Every Portfolio Company Engineer Should Understand

Cloud costs are structured very differently from the traditional data center model, and according to Claire Milligan, most companies fail to take advantage of that difference. In the data center era, infrastructure was a capital expenditure: servers were purchased, deployed, and run continuously regardless of actual demand. When companies moved to the cloud, the commercial promise was that they would only pay for what they use. In practice, many engineering teams simply replicated their data center behavior in the cloud, running servers continuously and accumulating unnecessary cloud costs.

The most impactful intervention Aimably makes in reducing cloud costs, according to Claire, is helping engineering teams restructure services so they expand and contract with actual user load. When more customers sign on, servers scale up or additional servers are added. When demand drops, those resources contract. This dynamic scaling principle applies not just to core compute but also to caching layers, structured search tools, and AI technologies, all of which have native expansion and contraction capabilities that most teams are not fully utilizing, and all of which contribute to runaway cloud costs when left unmanaged.

Claire notes in the episode that engineering teams often know what they know and built their infrastructure the way they were taught. Reducing cloud costs in this context is not about criticizing the existing team but about giving them better tools and frameworks to level up their capabilities. The approach she describes is one where engineers emerge from the process with a broader skill set, not a sense of failure, a nuance that matters when fund managers are trying to retain talent through a post-acquisition operational transition. Harvard Business Review’s research on IT transformation supports the view that technical team buy-in is a critical factor in successful operational change programs.

Cloud Costs and the Operating Model: Why Fund Managers Should Build Before They Buy

Cloud costs are one dimension of a broader operational planning challenge that Claire Milligan addresses directly in this episode: the discipline of building a detailed operating model before an acquisition closes. Her perspective draws from her direct experience as an operator inside a private equity-owned business, giving her a ground-level view of what happens when fund managers arrive with an investment thesis that has not been translated into a clear operational plan. The absence of that plan, she explains, creates costly delays in the time it takes to begin generating real returns, and those delays compound when cloud costs and other operational inefficiencies go unaddressed.

The first principle Claire identifies is to build the operating model before the acquisition, not after. Fund managers who rely solely on industry benchmarks to project a forward-looking profit and loss statement, she argues, are making a significant error. Benchmarks can inform the model, but they should be drawn from companies in similar industries with comparable success profiles and directional alignment with where the fund intends to take the business. This is especially relevant when cloud costs represent a material component of the cost structure, because cloud costs do not behave the way traditional fixed-cost benchmarks predict.

The second principle is selectivity in benchmark use. Claire does not argue against benchmarks; she argues for using the right ones, specifically those sourced from companies that are analogous not just in size but in strategic trajectory. A high-growth SaaS company being repositioned as a cash cow has a very different cloud costs optimization profile than a company being positioned for aggressive top-line expansion. Fund managers who conflate those two profiles when building their operating models set up their operators to optimize for the wrong outcomes. The Wall Street Journal’s coverage of private equity value creation consistently highlights operational planning rigor as a differentiating factor among top-performing funds.

Cloud Costs Communication: The Third Pillar of Post-Acquisition Value Creation

Cloud costs savings and operating model discipline mean little if fund managers cannot communicate the investment thesis clearly to the operators responsible for executing it. In this episode, Claire Milligan identifies transparent, explicit communication as the third foundational principle of effective post-acquisition value creation, and she frames it as something that goes well beyond generic leadership advice. The consequences of poor communication, she explains, are measurable: inertia inside portfolio companies, misaligned executive decisions, and lost time on the path to the intended financial outcome.

Cloud costs are a useful illustration of this communication challenge. Engineering teams managing cloud infrastructure often do not know that reducing cloud costs is a priority for the new ownership. Without explicit direction, they default to what they have always done, and cloud costs continue to accumulate. Claire’s example from her own experience as an operator makes this concrete: she was asked to transform a growth-oriented line of business into a cash cow, and the clarity of that direction shaped every decision she made, including decisions about cloud costs, pricing, and headcount.

The communication principle extends to executives who may not align with the fund’s direction. Claire’s view, as expressed in this episode, is that fund managers should communicate the operating vision loudly and clearly, and if a specific executive cannot operate within that vision, it is better to identify that early than to spend years managing passive resistance. This applies directly to technology leaders responsible for cloud costs management, where misalignment on priorities can result in hundreds of thousands of dollars in avoidable cloud costs remaining on the books. Forbes has documented that communication clarity is among the most consequential leadership behaviors in organizational change contexts.

Cloud Costs and Industry Mastery: What Fund Managers Must Know Before Advising Operators

Cloud costs optimization does not happen in a vacuum. It requires fund managers to develop enough operational fluency in the industries they invest in that their guidance carries credibility with the technical and operational teams inside portfolio companies. Claire Milligan identifies industry mastery as the first of three foundational competencies for fund managers seeking to deliver real results from their investments, alongside capital discipline and clear vision communication. Without it, fund managers risk giving advice that sounds financially logical but is operationally misaligned with what the business actually needs.

Cloud costs are a direct test of this principle. A fund manager who understands that cloud costs are the second-largest expense line at a technology company, and who knows that those costs are structurally reducible through auto-scaling and infrastructure optimization, is better positioned to ask the right questions in board meetings, due diligence reviews, and portfolio reviews. A fund manager who treats cloud costs as a fixed and unmanageable item is, by contrast, leaving a significant value creation opportunity on the table. Industry mastery in the technology sector increasingly requires familiarity with cloud costs as a strategic lever, not just a line item.

The second competency Claire highlights is cash discipline, the deliberate conservation and targeted deployment of capital rather than treating a new investment round as permission to spend freely. Cloud costs are a direct manifestation of this principle. Companies that do not manage cloud costs actively are often spending money on infrastructure that is not generating proportional value. Fund managers who instill a cash-first culture inside their portfolio companies create the conditions for cloud costs and other operational expenditures to be scrutinized continuously, not just at exit. Bloomberg has reported that scrutiny of cloud costs among private equity-backed technology companies has intensified significantly as interest rate environments have shifted and capital efficiency has become a more prominent investment criterion.

Cloud Costs and Authenticity: The Leadership Principle That Protects Your Investment

Cloud costs are ultimately reduced by people, engineers, operators, and executives who make thousands of small decisions every day about how infrastructure is used, structured, and governed. The quality of those decisions is shaped in large part by the culture and leadership environment inside the portfolio company. In this episode, Claire Milligan closes her advice to fund managers with what she identifies as the most underestimated factor in operational success: authenticity as a leadership practice.

Claire’s definition of authenticity in this context is more specific than conventional leadership advice typically offers. She describes it as a proactive decision to reveal aspects of yourself, including the parts you might expect to be judged for, before others have the opportunity to use those qualities against you. Her example from mentoring a rising executive illustrates how the failure to bring one’s full self into a professional environment can create hidden friction that undermines performance and trust. In the context of managing cloud costs and executing a post-acquisition operational plan, that same hidden friction shows up as misaligned incentives, passive resistance to change, and lost momentum.

For fund managers, the leadership authenticity principle extends to how they communicate their cloud costs reduction goals and their broader investment thesis to operators. Fund managers who are transparent about what they want, including aggressive cloud costs targets, structural changes to engineering teams, and shifts in product strategy, create the conditions for operators to self-select in or out of the program quickly. That clarity reduces the cost of misalignment, which is itself a form of operational efficiency. Harvard Business Review’s research on authentic leadership supports the view that leaders who bring deliberate transparency to their roles generate stronger organizational alignment and faster execution against strategic goals, including operational ones like cloud costs management.

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Ryan Miller BSc., MFin.
Host, Making Billions Podcast
Founder, Fund Raise Capital
Built for fund managers and capital raisers working in the $10M to $500M+ range.

Book Your Strategy Call →

About the Guest

Claire Milligan is the CEO of Aimably, a software company that helps venture capitalists and private equity fund managers reduce the cloud costs of their portfolio companies and enhance return on investment across their technology holdings. Her background includes direct operational experience inside private equity-owned businesses, where she led significant strategic transformations including cost restructuring and business repositioning initiatives.

Aimably operates two service lines focused on cloud costs, ongoing savings identification and pre-acquisition due diligence support, and has published a white paper on creating value in the cloud that outlines the firm’s full methodology for reducing cloud costs at private equity-owned businesses. The white paper is available at aimably.com/making-billions.

Topics Covered in This Article

• How cloud costs function as the second-largest expense line at technology portfolio companies
• Cloud costs optimization strategies using auto-scaling and dynamic infrastructure management
• Due diligence frameworks that incorporate cloud costs analysis before acquisition
• Building operating models before acquisition to account for cloud costs and other variable expenses
• How fund managers can communicate investment theses to operators managing cloud costs and infrastructure
• The role of industry mastery in helping fund managers guide operators on cloud costs and strategic priorities
• Capital discipline and the relationship between cash conservation and cloud costs management
• Authenticity as a leadership practice that reduces operational friction inside cloud costs-intensive portfolio companies
• How Aimably’s two-line service model addresses cloud costs at both the operational and deal-stage levels
• Benchmark discipline in operating model construction for technology companies with significant cloud costs exposure

Cloud Costs Due Diligence: How Fund Managers Can Use Infrastructure Analysis to Compete More Effectively at Deal Time

Cloud costs analysis at the pre-acquisition stage represents one of the most underutilized competitive tools available to fund managers today, particularly those competing against larger, more established firms for the same deals. In this episode, Claire Milligan explains that Aimably’s due diligence offering delivers a complete snapshot of a target company’s cloud costs profile within 24 hours, giving fund managers a level of operational intelligence that most of their competitors are not yet incorporating into their offer process. That intelligence, she notes, has direct implications for how much debt a fund is comfortable assuming, how competitive an offer can be structured, and what the post-close operational roadmap should prioritize.

Cloud costs data gathered during due diligence changes the nature of the questions fund managers ask in deal conversations. Rather than treating cloud costs as a number to be accepted as presented, fund managers who understand the underlying infrastructure can assess whether that number reflects a well-managed operation or a significant savings opportunity waiting to be realized after close. Claire’s framing in the episode is precise: that visibility into cloud costs maturity helps fund managers determine not just what they are buying, but what the business can become under disciplined operational management.

For emerging fund managers competing against established platforms with larger teams and more resources, cloud costs due diligence can serve as a genuine differentiator. A fund manager who arrives at a deal process with a 24-hour infrastructure assessment already completed is demonstrating operational sophistication that translates directly into a more credible offer and a more credible post-acquisition plan. Investopedia’s coverage of operational due diligence underscores that the depth of pre-acquisition operational analysis is increasingly a separating factor between funds that generate consistent value and those that do not.

Cloud Costs and the Portfolio Company Engineering Team: How Fund Managers Can Support Technical Talent Through Optimization

Cloud costs reduction is a technical initiative, and the people most directly responsible for executing it are the engineers who built and maintain the infrastructure inside portfolio companies. In this episode, Claire Milligan is explicit that Aimably’s approach to cloud costs optimization is designed to elevate those engineering teams rather than expose their past decisions as failures. The philosophy matters because fund managers who ignore the human dimension of cloud costs change programs risk alienating the technical talent they need to execute their broader value creation plans.

Cloud costs in most acquired companies reflect the decisions of engineering teams who were trained in a specific environment and built infrastructure accordingly. As Claire explains in the episode, many teams simply replicated data center behavior when they moved to the cloud, running servers continuously without taking advantage of the cloud’s native ability to scale dynamically with actual user demand. Framing cloud costs optimization as a leveling-up opportunity rather than a correction gives engineers the professional motivation to engage with the process and carry the new capabilities forward long after an outside advisor has completed their engagement.

The fund manager’s role in this dynamic is to set the tone. When leadership communicates that cloud costs reduction is a priority and that the engineering team will be supported through the process rather than blamed for prior decisions, the conditions for successful change are established from the start. Fund managers who invest in this kind of internal positioning around cloud costs create engineering cultures that are self-correcting over time, continuously reviewing infrastructure decisions against cost efficiency principles without external prompting. Harvard Business Review’s research on team engagement consistently shows that how change initiatives are framed by leadership has a direct bearing on whether technical teams contribute fully or disengage during periods of operational transformation, including those focused on cloud costs.

Cloud Costs, Benchmarks, and Operating Models: The Framework That Separates Disciplined Fund Managers from the Rest

Cloud costs do not conform neatly to industry benchmarks, and fund managers who build their post-acquisition operating models on benchmark-only assumptions are making a structural error that compounds over time. Claire Milligan’s advice on this point in the episode is direct: benchmarks have a legitimate role in model construction, but only when they are sourced from companies that are genuinely analogous in industry, size, and strategic trajectory to the business being acquired. A benchmark drawn from the wrong peer group produces a forward-looking profit and loss statement that bears little relationship to what the acquired business can actually achieve on cloud costs and other variable expense lines.

The operating model discipline Claire advocates is built on a pre-acquisition foundation. Fund managers who wait until after close to begin modeling how cloud costs and other expenses should evolve under new ownership lose critical weeks and sometimes months of value creation time. As she explains in this episode, that time loss is compounded by the inertia that naturally exists inside a company that has just received a new investment round and assumes that what it was doing before will continue to be rewarded. A pre-built operating model with explicit cloud costs targets gives operators a clear mandate from day one rather than an ambiguous directive to improve.

The connection between operating model rigor and cloud costs management is direct. Cloud costs are among the most variable and most improvable elements of a technology company’s cost structure, which means they are also among the most sensitive to the assumptions embedded in the operating model. Fund managers who build their models with a realistic view of cloud costs savings potential, informed by actual infrastructure analysis rather than benchmark averages, are positioning their portcos to hit financial milestones faster and with greater confidence. The Wall Street Journal’s reporting on private equity operational value creation highlights that funds with the most disciplined pre-acquisition planning processes consistently outperform peers who rely primarily on financial engineering rather than operational improvement to drive returns.

Cloud Costs and the Authenticity Framework: A Leadership Principle With Direct Operational Consequences

Cloud costs, operating model discipline, and communication clarity are all tools that fund managers can apply immediately. But the thread that connects all of them, according to Claire Milligan in this episode, is authenticity, not as an abstract value but as a concrete leadership practice with measurable operational consequences. The way fund managers show up, communicate their intentions, and model transparency inside their portfolio companies directly shapes whether cloud costs initiatives and other operational programs take root or stall against hidden resistance.

Claire’s definition of authenticity, as shared in the episode, is proactive rather than passive. It is not simply about being honest when asked; it is about surfacing the parts of yourself that others might use against you before they have the opportunity to do so. In the context of cloud costs and operational change programs, this principle translates into fund managers being explicit about their goals, their timelines, and the consequences of non-performance with the executives and operators responsible for execution. That transparency removes the ambiguity that allows passive resistance to cloud costs reduction and other operational initiatives to persist unaddressed for months at a time.

The leadership authenticity framework Claire describes is directly compatible with the kind of institutional discipline that top-performing fund managers apply across all areas of portfolio management, including cloud costs. Fund managers who are transparent about what they want, specific cloud costs targets, structural engineering changes, pricing adjustments, give their operators the clearest possible mandate and eliminate the friction that comes from hoping executives will infer the right direction. Forbes has documented that authentic leadership behaviors, including proactive transparency and explicit communication of expectations, are strongly associated with faster organizational alignment and more successful execution of operational change programs, including those centered on cloud costs management and infrastructure optimization.

For Fund Managers Raising $10M to $500M+

The Room You Have Been Trying to Get Into

The fund managers closing institutional LPs are not smarter than you. They are better positioned. Fund Raise Capital works exclusively with alternative asset managers who are serious about building a capital raising machine — not guessing their way through LP conversations.

This is not a course. This is not a community. This is direct access to the frameworks, relationships, and infrastructure used by fund managers operating at the highest levels of the alternative asset industry.

Ryan Miller BSc., MFin.
Host, Making Billions Podcast
Founder, Fund Raise Capital
Built for fund managers and capital raisers working in the $10M to $500M+ range.

Book Your Strategy Call →

About the Guest

Claire Milligan is the CEO of Aimably, a software company that helps venture capitalists and private equity fund managers reduce cloud costs across their portfolio companies and enhance return on investment across their technology holdings. Her background includes direct operational experience inside private equity-owned businesses, where she led significant strategic transformations including cost restructuring and business repositioning initiatives that required translating fund manager investment theses into executable operational plans.

Aimably operates two service lines focused on cloud costs, ongoing savings identification and pre-acquisition due diligence support, and has published a white paper on creating value in the cloud that outlines the firm’s full methodology. The white paper is available exclusively for Making Billions listeners at aimably.com/making-billions.