How to Build a Cloud Operating Model? Key Steps Explained

Cloud adoption is not just about moving workloads—it’s about making the cloud work for your business.

Yet, many organizations struggle with rising costs, security risks, and operational inefficiencies due to a lack of structure.

A recent Flexera report found that companies waste up to 32% of their cloud budgets due to poor governance and oversight.

This is where a Cloud Operating Model (COM) becomes essential. Instead of treating the cloud as just another IT upgrade, businesses need a framework that defines ownership, optimizes resource deployment, and controls costs.

In this guide, we’ll break down the steps to build a Cloud Operating Model, helping you create an efficient, secure, cost-effective cloud environment without the chaos.

What is a Cloud Operating Model?

Before diving into the steps to build a cloud operating model, let’s first understand its basics.

A Cloud Operating Model (COM) provides a structured framework for managing cloud environments. It defines how your business will handle governance, security, operations, and costs in the cloud.

At its core, a Cloud Operating Model answers three key questions:

• Who owns what? (Roles & responsibilities)
• How do things get done? (Processes & automation)
• What tools do we use? (Technology & frameworks)

A well-designed model helps businesses:

• Ensure security & compliance without slowing down innovation.
• Control cloud spending and avoid unnecessary costs.
• Standardize operations to improve efficiency.
• Enable teams to work seamlessly across different cloud platforms.

Now, Let me take you through the key steps to building a cloud operating model.

7 Key Steps to Build a Cloud Operating Model

Here are the seven key steps to building a Cloud Operating Model, which you must follow to reap maximum benefits.

1. Define Your Cloud Strategy

Before setting up a cloud operating model, define why you’re moving to the cloud. Are you looking to scale faster?

Cut infrastructure costs? Improve security? Your cloud operating model should align with your business goals.

Key questions to consider:

• What workloads will run in the cloud?
• Should you go with public, private, or hybrid cloud?
• What compliance standards (GDPR, HIPAA, ISO 27001) must you meet?

A clear cloud strategy upfront will help avoid confusion and wasted efforts later.

2. Set Up Governance & Security Controls

Cloud governance is about setting rules and policies for effectively managing cloud resources. Businesses may face security breaches, compliance violations, and budget overruns without governance.

Best practices for cloud governance & security:

• Define role-based access control (RBAC) – Limit who can access what.
• Automate security monitoring – Use AI-driven tools to detect threats.
• Set up cost controls – Avoid unexpected cloud bills.
• Ensure compliance enforcement – Automatically apply security policies.

A strong governance model ensures that security and cost management don’t become afterthoughts.

3. Standardize Cloud Workflows

Many companies struggle with cloud sprawl, where different teams use different tools, making consistency impossible.

To fix this, standardize processes across all teams.

• Use Infrastructure as Code (IaC) for deployments (Terraform, AWS CloudFormation).
• Define repeatable workflows for provisioning and scaling cloud resources.
• Adopt DevOps practices to improve collaboration between development and operations.

This reduces errors, improves efficiency, and makes cloud operations more predictable.

4. Optimize Cloud Costs from Day One

A major mistake businesses make is failing to monitor cloud costs early on. Since cloud resources scale quickly, expenses can skyrocket without proper oversight.

Here’s how to keep spending in check:

• Use autoscaling – Adjust resources automatically based on demand to avoid overprovisioning.
• Choose reserved instances – Save costs by committing to long-term cloud usage.
• Set up real-time cost tracking – Get alerts before budgets are exceeded.
• Adopt FinOps principles – Align finance and IT teams to manage cloud spending effectively.

Taking a proactive approach ensures cloud investments stay optimized and cost-efficient.

5. Automate Operations & Monitoring

Managing cloud environments manually isn’t scalable. Automation helps streamline operations, reduce errors, and improve efficiency.

Automate routine tasks:

• Provisioning: Use Infrastructure as Code (IaC).
• Security patching: Set up auto-updates.
• Incident response: Automate alert systems for faster issue resolution.

Monitor performance in real-time:

• Use cloud-native monitoring tools (AWS CloudWatch, Azure Monitor).
• Set up automated health checks for applications.

This ensures your cloud runs smoothly 24/7 with minimal downtime.

6. Build a Cloud-Savvy Team

Technology alone won’t make cloud adoption successful—your team needs the right skills.

How to upskill your workforce:

• Establish a Cloud Center of Excellence (CCoE) – A dedicated team to drive cloud adoption.
• Invest in training & certification – AWS, Azure, and Google Cloud offer official courses.
• Encourage a DevOps culture – Improve collaboration between development and IT teams.

Without a well-trained team, even the best cloud model will fail.

7. Keep Evolving & Innovating

A Cloud Operating Model isn’t a one-time setup—it needs constant improvements as business needs and technology change.

Continuous optimization strategies:

• Conduct regular audits to identify inefficiencies.
• Adopt AI & automation to enhance performance monitoring.
• Stay updated with emerging trends like serverless computing and edge AI.

A flexible approach ensures your cloud model stays relevant and delivers value long-term.

Case Study: How Spotify Scaled with a Cloud Operating Model

Spotify, a leading music streaming company, needed a scalable and efficient cloud model to support millions of users.

Challenges:

• Managing infrastructure at scale.
• Ensuring uptime for millions of daily users.
• Reducing operational complexity.

Solution:

• Moved to Google Cloud for flexibility and scalability.
• Adopted DevOps & automation to streamline deployments.
• Implemented FinOps to optimize cloud costs.

Results:

• Reduced infrastructure costs by 40%.
• Achieved 99.99% uptime globally.
• Improved developer productivity with faster deployments.

Spotify’s success shows how a structured Cloud Operating Model can drive efficiency and scalability.

Conclusion

Building a Cloud Operating Model is essential for businesses that balance governance, efficiency, security, and cost optimization.

Organizations can maximize their cloud potential by following the steps to build a Cloud Operating Model—from defining objectives to automating operations and optimizing costs.

For businesses looking to streamline their cloud management, security, and cost control, partnering with a cloud managed services provider can ensure seamless implementation and long-term success.