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Controlling Cloud Spending: Why Cloud Costs Quickly Spiral Out of Control

Welcome to part two of the series “Controlling Cloud Spend: Avoiding the Steep Cost of Unchecked Cloud Growth”. This article explains why cloud computing costs can quickly spiral out of control. 

Cost of the Cloud

Cloud Can Offer Too Much of a Good Thing

The very feature that makes cloud computing most attractive—its instant, on-demand scalability—can also become its greatest flaw when not managed properly. Scaling up happens easily, and the relative price savings of spinning up a single cloud instance, compared to traditional on-premises infrastructure, are incredible. Because both “cloud” and “easy” are perceived as “cheap,” businesses—and more specifically, their users—tend not to worry about controlling or limiting the expansion of cloud instances. AWS enables anyone with a credit card to spin up a cloud server in seconds—this is “disaggregation of IT”—and in many organizations, this means cloud usage expands largely unchecked. 

Unchecked Cloud Growth Leads to Huge Spending Waste

Unchecked cloud growth leads to another problem: Most organizations do a poor job of turning the lights off when they leave the room, so to speak. Without controls or visibility into their cloud usage, non-critical cloud infrastructure is left running overnight and all weekend long, even though it’s not in use. Cloud instances spun up for temporary workflows or targeted projects are left running for weeks or months beyond their shelf life. 

Unpredictable Usage Spikes Leave Business Paying the Premium Cloud Price

The basic cloud story says you pay only for the computing power you use. But the more complicated truth is that cloud providers have complex, variable pricing structures based on basic supply and demand. Planned usage or reserved instances can yield significant cost savings. But most businesses lack the visibility to accurately understand and predict future needs. Moreover, unchecked expansion of cloud instances leads to unpredictable spikes in usage. These spikes leave the business paying the premium cost for on-demand cloud resources, quickly eliminating any cost-efficiencies of cloud infrastructure.

All of this creates an incredible amount of wasted cloud spending. RightScale found that nearly half of all cloud spending in the typical organization is wasted or unnecessary—falling into one of the use cases just described. ParkMyCloud, a provider of cloud management services, used numbers from Gartner to estimate that companies waste nearly $6 billion in inefficient or unused cloud services every year.1

Enterprise Mobility Presents Useful Lessons

Mobile devices are another technology that has completely transformed the business world in less than a decade. Enterprise mobility followed a very similar maturity path: Employees began using company-provided mobile devices for work, recognizing the convenience and connectivity benefits. This led to businesses taking on the complex and unpredictable costs of mobile devices and mobile computing. They quickly realized the need to control mobile usage to prevent runaway spending. Mobile device management and mobile spend optimization tools and strategies have now become best practice for maximizing the benefits of enterprise mobility without exposing the business to volatile or uncontrolled costs. 

Most Businesses Ill-Equipped to Control Cloud Spending

Rapidly growing cloud costs are not news to most business executives. In fact, optimizing existing cloud usage ranked as the most common top priority among enterprises for 2017.2 But even those with focused cloud spending initiatives struggle to gain and maintain control for two key reasons. The first barrier is visibility. The cloud transformation has dramatically increased the complexity of IT environments. A recent survey found that only 1 in 3 IT administrators feel they have the modern tools necessary to gain visibility and control cloud usage.3 But even with visibility, managing cloud computing resources is fundamentally different than the way IT professionals have managed IT infrastructure and spending for the past 30 years. Whereas pre-cloud IT solutions were simple one-time investments with static maintenance agreements, cloud solutions demand constant oversight and control across hundreds or even thousands of instances—lining up supply with demand in real-time to optimize usage and costs. That level of sustained vigilance is unlike anything IT teams have ever been required to do before—and it’s something most IT teams are neither funded nor equipped to manage today.

Some leading organizations, such as the aforementioned BMC, have successfully implemented cloud spend optimization internally. However, most others quickly recognize that the relative novelty of cloud computing means they lack the internal spend analytics expertise to effectively tackle the cloud spend optimization challenge. Instead, they’re engaging partners such as Advocate™—trusted names with proven records of helping businesses control and optimize their technology spending.

Join us for the third article of our three-part blog series: “Controlling Cloud Spending: Avoiding the Steep Cost of Unchecked Cloud Growth” – Part 3: Best Practices for Cloud Spend Optimization.

http://www.parkmycloud.com/blog/it-spending-cloud-waste/
2 RightScale 2017 State of the Cloud Report
https://www.sciencelogic.com/

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