Four in five companies are overspending on cloud

A white piggy bank sits on a reflective surface while clouds in the shape of dollar signs float in the sky behind it
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Cloud computing customers are hemorrhaging unnecessary budget, according to UK and US-focused research released this week.

The survey of 350 cloud decision makers by Arlington Research on behalf of cloud optimization firm Virtana found that the majority (82%) of comoanies using cloud are spending far more than they need to.


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One of the factors limiting cost efficiency in the cloud is a lack of visibility across multiple cloud workloads, with 86% of respondents suggesting that they cannot get a global view of cloud costs in minutes and 70% of companies said that limited visibility wastes time and creates cost inefficiencies. This is a particular problem for the 84% of respondents with workloads deployed across multiple public cloud infrastructures.

"The pandemic has accelerated organizations' journey to the cloud," said Archana Vankatarman, Associate Research Director, Cloud Data Management, IDC Europe. "In fact, a 'more aggressive move to the cloud' was cited as the top item on the list of planned changes to the IT strategy as a result of the 2020 crisis, according to IDC's COVID-19 Impact Survey in 2020."

Virtana noticed a disconnect between perception and performance. While real-world cloud financials were dire, respondents rated their own ability to handle costs highly. More than three-quarters of respondents said they were adept at identifying unused resources, configuring real-time cost alerts, and understanding cost allocations. Over four in five rated themselves highly at forecasting usage patterns and predicting long-term spending. These are crucial skills in cloud cost management, because they enable better long-term savings through mechanisms like instance reservations.

In spite of this confidence, many companies didn't have the necessary tools to handle costs. Fewer than half of them had billing visibility tools and usage dashboards. Only 53% of respondents had capacity and usage planning tools in-house.

Organizational structures might be exacerbating these problems. More than two-thirds of all companies felt that their teams worked in silos, with even more complaining that limited collaboration hindered their ability to adapt. Companies used fragmented sets of tools and techniques to manage their cloud infrastructures, the survey found.

The problem is escalating as companies shift more workloads to the cloud. Almost nine in ten respondents now have more than a quarter of their workloads in the cloud, while 44% are running more than half there.

Archana added: "Public cloud platforms provide enterprises with agile, on-demand, flexible access to resources to align with a digital business's dynamic needs. But inefficient cloud operations are emerging as a top barrier. The duct-taped point tools and silos can make cloud cost management complex. The belief that they are wasting at least 15% of their public cloud spending will drive enterprises to actively invest in cloud cost management to halve cloud waste."

Optimizing cloud economics - a process known as FinOps - is a growing discipline for companies disillusioned with the amount that they're spending in the cloud. Earlier this year, a survey by the Linux Foundation found costs spiralling for users of the Kubernetes container orchestration system, who were failing to track their expenditure.

"The survey shows that one of the biggest challenges is how to manage workloads operating in the cloud to avoid unexpected costs," said Christina Richards, Virtana's CMO.

"While it's clear that experience makes a difference, so does having a single modular platform for de-risking cloud migrations, having deep precision observability into workloads before, during, and after the move, and optimizing and managing efficiently once workloads are in the cloud."

Danny Bradbury

Danny Bradbury has been a print journalist specialising in technology since 1989 and a freelance writer since 1994. He has written for national publications on both sides of the Atlantic and has won awards for his investigative cybersecurity journalism work and his arts and culture writing. 

Danny writes about many different technology issues for audiences ranging from consumers through to software developers and CIOs. He also ghostwrites articles for many C-suite business executives in the technology sector and has worked as a presenter for multiple webinars and podcasts.