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Tag: overprovisioning

  • How to Avoid Cloud Overspend

    How to Avoid Cloud Overspend

    Cloud overspend can have a major impact on a company’s bottom line. Here’s what organizations need to know

    Cloud technology has reached the stage of mainstream adoption across multiple industries, be it finance, health care, manufacturing or retail. According to a Research and Markets report, the global cloud computing market is expected to grow further to $832.1 billion by 2025, at a compound annual growth rate of 17.5% during the forecast period. However, with the expected increase in cloud usage, cloud waste is bound to increase. According to a report by Gartner, cloud waste is forecasted to reach $21 billion by 2021.

    Companies that are not aware of the factors that lead to cloud overspend will end up wasting a lot of money without even realizing it. This article discusses some of the reasons for cloud overspend and potential ways to optimize cloud usage and expenditure.

    1. Understand cloud better: One of the most prevalent reasons organizations overshoot their anticipated cloud usage is a general lack of understanding of cloud technologies. They often fail to make well-informed choices at the beginning of their journey to the cloud. Without truly understanding their business needs and the trends in their industry, they will opt for a one-size-fits-all approach, which frequently does not work. Gartner estimates that 70% of the global cloud overspend can be attributed to companies that do not have a defined plan for cloud cost management. An activity as simple as organizing data before a cloud migration can help organizations optimize cloud usage.
    2. Define a policy around cloud usage and associated expenditure: Organizations that do not have a defined strategy to navigate their cloud journey frequently end up with misaligned priorities that can lead to overspend. This lack of strategy manifests with different people and/or departments managing disconnected cloud initiatives that frequently are not aligned with the overall business goals or bound by governing policies, the result of which is typically out of control cloud sprawl. To avoid overspend due to a lack of governance and oversight, organizations should at the very least define these three controls at the start of their cloud journey:
      • Financial controls at multiple levels of the organization.
      • A project lead who coordinates, controls and manages cloud resources across the organization.
      • Resource quota policies to help prevent unanticipated spikes in usage.
    1. Control overprovisioned resources: According to a report by RightScale, approximately 40% of cloud instances are larger than needed for their workloads. The widespread perception that cloud technology is economical and affordable makes companies worry less about controlling the expansion of cloud instances. This often leads to the creation of unnecessary or oversized instances, resulting in shockingly large bills.
    2. Decommission idle and orphan resources: Continuous and thorough assessments help to identify and eliminate assets that are no longer used or required. The right assessment helps identify unattached volumes and orphaned assets that can be deleted. Investing in cloud cost optimization tools can assist with these assessments and reviews. Without a regular review of cloud resources, companies will continue to pay for resources that are no longer needed.
    3. Track vendor contracts regularly: Keeping a close watch on your vendor contracts governing licensing and subscription services is a complicated but necessary step to reduce cloud overspend. This becomes more critical for companies dealing with multiple vendors for different cloud services. Vendor contracts should be re-negotiated and fine-tuned at regular intervals to reduce subscription costs. These savings could be substantial in the long run.

    One of the most important steps on your journey to the cloud is finding the right partner that can assist you at every stage. Choose a technology partner that can help with not just implementation but also the management of your cloud instance. A strategic partner will help you leverage the cloud to drive business growth as well as scale your cloud usage and spend to suit your ever-changing business needs.

  • Cloud Waste To Hit Over $14 Billion in 2019

    Cloud Waste To Hit Over $14 Billion in 2019

     The good news to start 2019 is that cloud adoption is growing rapidly. Most people realize this, but along with major growth comes some less welcome news. Wasted cloud spend is also up—often dramatically. Chances are, if you’re spending money on cloud, some of that money is being wasted. For some, a lot of that money is being wasted. Here are the numbers.

    Predicted Cloud Spending 2019

    The latest predictions from Gartner estimate that overall IT spending will reach $3.8 trillion this year, a growth of 3.2 percent over IT spending in 2018. Of this spend, public cloud spending is expected to reach $206.2 billion—of which, the fastest growing segment is infrastructure as a service (IaaS), which Gartner says will grow 27.6 percent in 2019 to reach $39.5 billion, up from $31 billion in 2018.

    Now we can subdivide the public cloud spend number further to look just at compute resources—typically two-thirds of cloud spend is on compute, or about $26.3 billion. This segment of spend is especially vulnerable to waste, particularly from idle resources and oversized resources.

    Wasted Cloud Spending from Idle Resources

    Let’s first look at idle resources. This includes resources that are being paid for by the hour or minute, but that are not actually being used. Typically, this kind of waste occurs in non-production environments; that is, those used for development, testing, staging and QA. According to internal data available to my company, ParkMyCloud, about 44 percent of compute spend is on non-production resources.

    Most non-production resources are only used during a 40-hour work week, and do not need to run 24/7. That means that for the other 128 hours of the week (76 percent), the resources sit idle, but are still paid for.

    What does all this add up to?

    $26.3 billion in compute spend x 0.44 non-production x 0.76 of week idle = $8.8 billion wasted on idle cloud resources.

    Wasted Cloud Spending from Oversized Resources

    The other source of wasted cloud spend is oversized infrastructure; that is, paying for resources at a larger capacity than needed.

    RightScale found that 40 percent of instances were sized at least one size larger than needed for their workloads. Just by reducing an instance by one size, the cost is reduced by 50 percent. Downsizing by two sizes saves 75 percent.

    The data we see in our users’ infrastructure confirms this, and in fact we find that it may even be a conservative estimate. Infrastructure managed in our platform has an average CPU utilization of 4.9 percent. Of course, this doesn’t take memory into account, and could be skewed by the fact that resources managed are more commonly used for non-production resources. However, it still paints a picture of gross underutilization, ripe for rightsizing and optimization.

    If we take a conservative estimate of 40 percent of resources oversized by just one size, we find the following:

    $26.3 billion in compute spend x 0.4 oversized x 0.5 overspend per oversized resource = $5.3 billion wasted on oversized resources.

    Total Cloud Spending to be Wasted in 2019

    So, between idle resources and overprovisioning, wasted cloud spend will exceed $14.1 billion in 2019. In fact, this estimation of wasted cloud spend is probably low. This calculation doesn’t even account for waste accumulated through orphaned resources, suboptimal pricing options, misuse of reserved instances and more.

    Fortunately, cloud cost control is becoming top-of-mind as the industry is able to leverage cloud computing growth statistics to calculate the massive scale of this problem. If you are involved in your organization’s cloud  infrastructure, why not make reducing cloud waste one of your 2019 objectives?

    — Jay Chapel