The good news to start 2019 is that cloud adoption is growing rapidly. Most people realize this, but along with major growth comes some less welcome news. Wasted cloud spend is also up—often dramatically. Chances are, if you’re spending money on cloud, some of that money is being wasted. For some, a lot of that money is being wasted. Here are the numbers.
Predicted Cloud Spending 2019
The latest predictions from Gartner estimate that overall IT spending will reach $3.8 trillion this year, a growth of 3.2 percent over IT spending in 2018. Of this spend, public cloud spending is expected to reach $206.2 billion—of which, the fastest growing segment is infrastructure as a service (IaaS), which Gartner says will grow 27.6 percent in 2019 to reach $39.5 billion, up from $31 billion in 2018.
Now we can subdivide the public cloud spend number further to look just at compute resources—typically two-thirds of cloud spend is on compute, or about $26.3 billion. This segment of spend is especially vulnerable to waste, particularly from idle resources and oversized resources.
Wasted Cloud Spending from Idle Resources
Let’s first look at idle resources. This includes resources that are being paid for by the hour or minute, but that are not actually being used. Typically, this kind of waste occurs in non-production environments; that is, those used for development, testing, staging and QA. According to internal data available to my company, ParkMyCloud, about 44 percent of compute spend is on non-production resources.
Most non-production resources are only used during a 40-hour work week, and do not need to run 24/7. That means that for the other 128 hours of the week (76 percent), the resources sit idle, but are still paid for.
What does all this add up to?
$26.3 billion in compute spend x 0.44 non-production x 0.76 of week idle = $8.8 billion wasted on idle cloud resources.
Wasted Cloud Spending from Oversized Resources
The other source of wasted cloud spend is oversized infrastructure; that is, paying for resources at a larger capacity than needed.
RightScale found that 40 percent of instances were sized at least one size larger than needed for their workloads. Just by reducing an instance by one size, the cost is reduced by 50 percent. Downsizing by two sizes saves 75 percent.
The data we see in our users’ infrastructure confirms this, and in fact we find that it may even be a conservative estimate. Infrastructure managed in our platform has an average CPU utilization of 4.9 percent. Of course, this doesn’t take memory into account, and could be skewed by the fact that resources managed are more commonly used for non-production resources. However, it still paints a picture of gross underutilization, ripe for rightsizing and optimization.
If we take a conservative estimate of 40 percent of resources oversized by just one size, we find the following:
$26.3 billion in compute spend x 0.4 oversized x 0.5 overspend per oversized resource = $5.3 billion wasted on oversized resources.
Total Cloud Spending to be Wasted in 2019
So, between idle resources and overprovisioning, wasted cloud spend will exceed $14.1 billion in 2019. In fact, this estimation of wasted cloud spend is probably low. This calculation doesn’t even account for waste accumulated through orphaned resources, suboptimal pricing options, misuse of reserved instances and more.
Fortunately, cloud cost control is becoming top-of-mind as the industry is able to leverage cloud computing growth statistics to calculate the massive scale of this problem. If you are involved in your organization’s cloud infrastructure, why not make reducing cloud waste one of your 2019 objectives?