Cloud Inefficiencies Drag on Companies’ Bottom Lines: Survey

How much money do companies lose by over-provisioning cloud resources? According to a new study by cloud-management firm Cloudyn, the answer is quite a bit.

Cloudyn shared its findings with Forrester analyst James Staten, who offered them up in a May 24 blog posting. The bottom line: companies routinely forget to shut down cloud instances, decline to take advantage of cloud-instance discounts, and allocate extra-large instances when a small-to-medium one would do the same job.

“Not surprisingly, Cloudyn also found that the larger the instance, the worse the utilization, with Extra Large instances averaging just 4 percent utilization,” Staten wrote. “That’s worse than the average utilization of physical servers in 2001—before virtualization.”

In other words, companies are carrying some inefficient habits from the on-premises world into the cloud. As Staten points out, there’s a certain logic in overcompensating on the resources front: better to ask once, and get more than you need, than to keep returning to the bureaucratic battlefields for additional funding. But allocating excessive cloud resources can lead to companies being charged for capacity they never use—in the case of some companies, lots of capacity.

“These clients are spending between $12,000 to $2.5 million per year with [Amazon Web Services] and throwing away about 40 percent of that expense,” Staten cites as one example. “A medium instance at $0.32 per hour sounds so cheap, but when daily consumption leads to $130,000 in annual spend, which was the average for this group of customers, then 40 percent savings is very, very significant.”

Cloudyn’s software allows companies to monitor cloud-platform metrics such as cost, consumption, capacity, and so on. But they’re just one company marketing solutions for clients in search of a more efficient cloud; UptimeCloud and Cloudability also offer tools to that end.

Cloud vendors like to tout their products as far more scalable, flexible, and cost-efficient than on-premises counterparts. But for all that much-touted suppleness, sometimes the cloud crashes into the realities of clients’ operating budgets. The lesson here, if there is one, is that even when a service costs pennies per hour, it still pays to keep track of exactly how many pennies are being spent.

 

Image: Vibrant Image Studio/Shutterstock.com

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