Is Your Company Wasting Money on the Cloud?

There’s no denying that cloud technology is the way to go for businesses that want to run more efficiently. Thanks to the cloud, numerous business processes can run smoothly and an untold amount of data can be stored. The technology has become so vital that companies are set to spend more money on the cloud in 2018 than the previous year. Conversely, businesses are also wasting a lot of money on it, too.

Cloud Spending on the Rise

RightScale recently came out with the results of a survey they conducted among almost a thousand technology specialists. According to the cloud delivery specialist, enterprises (or companies with more than a thousand employees) are spending more on the cloud. The report reveals that 26 percent of companies are allocating more than $6 million annually to spend on the public cloud. About 26 percent of companies also admit they currently spending around $1.2 to $6 million for cloud services.

That number is expected to increase this year, with 71 percent of enterprises admitting they will increase their cloud budget by more than 20 percent. Meanwhile, 20 percent of companies plan to double what they previously spent on the cloud.

And it’s not just large corporations that are shelling out money on this technology. Small and medium-sized companies spend an average of $120 thousand on cloud providers per year.

Respondents in the RightScale survey use multiple cloud servers to run their applications. Some companies use about five different servers while experimenting with at least one more. Amazon remains the top provider of public cloud services, with AWS user numbers rising to 64 percent market share in 2018 as opposed to last year’s 57 percent. Azure and Google Cloud also saw a boost. Azure is up to 45 from 34 percent while Google Cloud saw an increase from 15 to 18 percent. IBM Cloud also rose from 8 to 10 percent.

What Companies are Doing Wrong

While different sectors view the increase in cloud spending in a positive light, the RightScale survey also implies that one-third of the money spent is wasted. Survey participants projected 30 percent wasted spending but RightScale has pegged the exact amount of waste to be nearer to 35 percent. So if an enterprise is paying their service cloud provider about $6 million annually, more than $2 million of that money goes to wasted or unused.

The RightScale report does not clearly pinpoint or discuss what companies are doing wrong. However, it’s clear that the eagerness of companies to utilize the cloud has contributed to the wasted spending. For instance, people subscribe or buy cloud services for their department or for their own duties. This has led to identical accounts being created for the same services.

The cloud’s reputation as being easy to use and affordable has also caused companies to become complacent about their budget. Businesses tend to be more open about expanding their cloud usage.

There’s also the very fluid pricing structure used by cloud providers. Rates depend on supply and demand, so as the demand for data rises, so does the cost.

How to Stop Wasting Money on Cloud Services

Enterprises are aware of how much money is being wasted on the cloud and how easily this uncontrolled spending can end in disaster. Most admit that improving how they utilize the service is now their top priority.

There are other strategies that companies can take to make cloud usage more beneficial and save money.

• Determine and Stop Abandoned Applications: The ease that applications are developed or run on the cloud has led to numerous abandoned apps. Unfortunately, this doesn’t mean they have been disabled. Some are still running inside different cloud service environments (ex. SaaS) despite companies not using them anymore. Determining these forgotten apps and decommissioning them can save companies some serious money.

• Picking the Appropriate Storage Model: Businesses are demanding data at an increasing rate due to cheap cloud storage options. But problems arise when the administrator chooses the wrong storage model. Remember that every data is different. Some are accessed more often while others are rarely used. The former needs to be stored somewhere where it can be retrieved quickly. This usually means a more expensive storage model. Meanwhile, older data or those that are rarely accessed can be stored in the more affordable storage tiers.

• Schedule Server Use: There’s no reason to maintain all cloud instances running constantly, especially when applications are mostly used during specific periods. It’s better to set an automated schedule that turns off cloud services during off-peak hours. There are numerous scheduling tools that companies can use for this.

Is your company’s budget evaporating into the cloud? Now is as good a time as any to run an audit to find out how you can use data services more efficiently to cut down on your operations cost.