$14.1 Billion in Cloud Spending to be Wasted in 2019

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    It’s that time of year: new gym memberships, fresh diet goals, and plans to reform… cloud spending?

    If you’re at all involved in your organization’s public cloud infrastructure, that last one should definitely be on your to-do list. 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% 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 ⅔ 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 take a look at idle resources — resources that are being paid for by the hour or minute, but 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. About 44% of compute spend is on non-production resources (that’s our number).

    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%), the resources sit idle, but are still paid for.

    So what we get is:

    $26.3 billion in compute spend * 0.44 non-production * 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% 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%. Downsizing by two sizes saves 75%.

    The data we see in our users’ infrastructure in the ParkMyCloud 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%. Of course, this doesn’t take memory into account, and could be skewed by the fact that resources managed in ParkMyCloud are more commonly 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% of resources oversized by just one size, we find the following:

    $26.3 billion in compute spend * 0.4 oversized * 0.5 overspend per oversized resource = $5.3 billion wasted on oversized resources

    Total Cloud Spending to be Wasted in 2019

    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.

    End the Waste

    It’s time to fight this cloud waste. That’s what we’re all about at ParkMyCloud — eliminating wasted cloud spending through scheduling, rightsizing, and optimization.

    Ready to join us and become a cloud waste killer? Let’s do it.

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