Add that to the general increase in cloud computing spending. For example, Synergy research found that spending on enterprise cloud computing infrastructure increased from $100 billion to $130 billion between 2019 and 2020. Do the math, and it’s easy to see how a CIO can get sticker shock when looking at cloud infrastructure bills.
Inflation is not the only factor
What is driving the rate increases? Inflation, including rising energy prices that affect everything from power to transportation, is just one factor. Supply chain issues are another: Taiwanese microchip manufacturers, which provide the vast majority of parts for the devices that power cloud infrastructure services, are still suffering from the supply chain problems that began when those factories shut down during the height of the pandemic.
Yes, the same semiconductor shortage that is making everything from cars to appliances more expensive is also impacting the cloud infrastructure sector. Given the fact that Taiwanese companies account for a share of 66 percent of global chip production, those supply line delays have a major impact on hardware prices.
Demand for cloud infrastructure services also skyrocketed during the pandemic spending will grow by 19 percent in 2021 aloneaccording to Gartner, due to the demand created by remote working, online learning and other sudden changes in the way business was done – changes that aren’t going away.
Businesses need more efficient cloud computing
Beneath the surface of the growth in cloud usage in recent years is a huge amount of waste. In its 2022 “State of the Cloud Report”, Flexera notes that organizations say they have wasted 32 percent of the money they spent on cloud infrastructure.
Cloud waste essentially stems from an overestimation of the cloud resources required by a given project. Cloud wastage includes issues such as scheduling too long a time frame for a given cloud-facing project, over-provisioning of resources, and a general lack of maintenance and optimization, especially for data and projects that no longer need to be in active storage or that use a lot of CPU use capacity.
How to reduce cloud costs
There are some fundamental things you can look at to reduce cloud costs:
- Optimize cloud purchases between groups. Expedia.nl‘s vice president of development and runtime platforms found that every company in his portfolio had purchased their own cloud-based development platform. By standardizing on a single platform during the pandemic, the company experienced huge cost savings.
- Choose the right kind of resources for your needs. The major cloud platforms offer “reserved” or “spot” options, which allow companies to purchase a specific number of computing instances at discounts of up to 90 percent compared to on-demand instances. For workloads that are intermittent and require server instances for a period of time, and if you can work with the configuration standards of those instances, there can be big savings.
- Find and delete unused resources. If a temporary server instance was created for a project and never deleted, or cloud storage was used for a project but was never deleted when the project ended, now is the time to jettison them.
- Use tools from cloud providers to avoid over-provisioning. In the days of the data center, server administrators often planned large amounts of hardware space to meet peak demand and anticipate growth. But with tools like autoscaling, load balancing, and more, cloud providers can help organizations respond to demand while avoiding low server instance and storage utilization.
- Existing project needs tailored to the right size. The major cloud providers all offer right-sized tools to help IT managers decide whether to switch cloud configurations to optimize usage and utilization. Because of all the configurations offered, the right size is not for the faint of heart. But increasing usage and reducing costs is a major motivating factor to try.
The benefits of the cloud are undeniable, but being cheaper than on-premises technology isn’t necessarily one of them. As companies move more workloads to the cloud and the cost of cloud computing rises, it is vital that technology leaders keep an eye on their overall spend and make adjustments where necessary.