A system and associated method for dynamically optimizing workload of a cloud computing system is disclosed. The cloud computing system comprises virtual machines, physical servers, a smart cloud workload balancer (SCWB), and an objects database (ODB) storing various parameters controlling operations and optimization behavior of the cloud computing system. The SCWB configures and runs the cloud computing system based on a VM topology. When the SCWB determines that the cloud computing system does not perform optimally based on a total cost of software cost for licensing all VMs and power cost of all running physical server, the SCWB calculates a new VM topology that minimizes the total cost and relocates VMs pursuant to the new VM topology.