How Much of Your Cloud Spend is Going to Waste?

Posted by
Josh Bouk

22 January 2019

Blog

2019 will see the public cloud market grow to over $221 billion, as more and more businesses wake up to the potential of cloud computing. One of the many compelling benefits leading this change is the promise of reduced costs and upfront spend. But, are companies really saving money? 

It turns out that many are actually squandering a shocking amount  – 35% of their cloud spend – by not effectively managing and optimizing their cloud.

Just where is all this money being wasted?

Orphaned Resources

Orphaned resources is the name given to services that no longer have a purpose. You'll know you have a problem if you find yourself being charged even when you think your instances have been closed. This happens when you close a compute resources but accidentally leave a storage resource running. Because there's no longer any application attached to this storage, you don't notice that it's left running indefinitely, ratcheting up your costs.

It's similar to installing a program on your PC. The program's install file still sits on your hard drive, taking up space, when the program is uninstalled. The difference, of course, is that you're not charged for the storage on your PC's hard drive; in the cloud, you are.

Organizations would be wise to root out orphaned resources, as, over time, they can be a real drain on resources.

Wasted Capacity

When migrating to the cloud, many companies assume they'll need to purchase at least the same amount of server capacity as their on-site data center provides.

This makes sense logically, but it fails to recognize that 80% of companies have more server capacity on-site than they'll ever actually use. So, when moving to the cloud, businesses find themselves paying far more than they should be, in exchange for resources they'll never use. In fact, a study of 20 organizations in 2017 found that 75% would actually see an increase in annual spend if they transferred their data directly to the cloud.

A major benefit of using the cloud is increased flexibility, allowing the adjustment of storage capacity, up or down, based on your needs in real-time. Additionally, AWS and Azure are always releasing updates to existing products and brand new services, offering significant improvements to capacity control.

Effective use of this flexibility, and consistent evaluation and optimization of your cloud services, are critical to avoid wasting valuable resources.

Unscheduled Virtual Machines and Incorrect Regions

Far too many companies leave their virtual machines (VMs) running in the cloud 24/7. This is the equivalent of leaving the heating on in your holiday home all year round. While it's sometimes necessary to keep instances running, it's best practice to shutdown unused VMs after business hours. 

Another cause of wasted cloud spend is incorrect region selection. The servers running VMs are based in various locations around the world, and costs vary depending on on energy expenses, real estate taxes, operating costs, and so on.

Choosing the right region for your workloads often comes down to which servers will cause the least latency for users. However, keeping costs down becomes an ever greater concern as your cloud use increases.

Despite this, according to a study by RightScale, only a small minority of businesses have a system in place for closing down VMs and automatically switching regions to save wasting cloud expenditure.

Conclusion

Public cloud services are offered on a pay-as-you-go basis. It's critical, then, that businesses ensure they're using everything they're paying for.

While there are steps that can be taken in-house to combat cloud spend wastage, the sheer amount of work required has led many businesses to seek out cloud management specialists to handle the heavy lifting for them. 

If you're wondering just how much money you could save by optimizing your cloud spend, request a free cloud assessment from Cass today.

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Topics: Cloud Management Services

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