Enterprises are investing more money in the cloud, but a large percentage of cloud spending is wasted on unused and underutilized cloud resources. RightScale predicts that more than $10 billion will be wasted on unused/underutilized cloud resources in the next 12 months.
Part of the problem has been a lack of support from cloud providers who have failed to help their customers reduce unnecessary cloud spending. The situation is improving, with cloud providers realizing that helping customers cut back on costs gives them a competitive advantage. AWS has arguably helped its customers the most, with its notifications to customers advising them when they are overspending helping to shave $500 million of cloud bills.
However, compared to RightScale’s figure of $10 billion, half a billion in cost reduction is just a drop in the ocean. RightScale’s research indicates that on average, each enterprise wastes around 35% of their cloud spending on unused and underutilized resources. Wasted spending on AWS alone is estimated to be cost enterprises around $6.4 billion a year. Add in wasted spending on Azure and Google Cloud and the total wasted spend rises to $10 billion a year.
Part of the problem is the complexity of cloud billing and pricing – RightScale notes that AWS has over 70,000 price points for compute instances alone. Businesses trying to decipher their cloud bill and optimize spending cloud find tens of thousands of different resource types and price points on a single cloud bill. Identifying cost saving opportunities can therefore be a major challenge.
RightScale’s solution is Optima – A cloud management and optimization solution that helps businesses identify areas where savings can be made and resources can be optimized.
An analysis of customer data from the Optima platform shows the areas where businesses have achieved the greatest savings.
The main area for cost saving is ensuring cloud instances are right-sized for workloads. 40% of enterprises have instances larger than necessary. While some spare capacity is required to ensure application performance is not affected, RightScale has determined that on average each oversized instance wastes between 50% and 75%. Rightsizing alone results in a 11%-16% savings on cloud bills.
Another area where costs are being spent unnecessarily is on VMs that are not in use. Simply switching off resources when they are not required can result in considerable savings. VMs are often left running 24/7, but simply turning off VMs and shutting down development resources outside of business hours can shave 67% off the cost.
While virtual machines can be shut down when not required, it is also important to delete the storage attached to those resources, yet many users neglect to delete storage and leave it running.
By carefully choosing the right regions, further savings can be made. Many businesses run cloud instances in the most expensive regions, but by switching to cheaper nearby locations it is possible to save a further 3% on average.
Many businesses have switched to discounted reserve instances to enjoy further savings. Reserve instances are offered at a discount of between 20-70%, with 60,000 discounted price points offered by AWS alone.
As cloud spending increases and more and more businesses switch from on-premise IT to the cloud, the amount being wasted is certain to increase, unless businesses start using cloud management solutions and start optimizing their resources more effectively.