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While the majority of organisations have budgeted spending for public cloud, most are unaware of how much they spend monthly on these services.
A survey of 200 businesses by Densify reported that most organisations use Amazon Web Services (AWS) and Microsoft Azure for their public cloud needs, but over 25% do not know their monthly spending.
Budgets in IT departments are generally set annually, but public cloud computing companies tend to charge on a monthly basis and make changes to their pricing regularly.
Unless an IT department closely scrutinises its cloud usage, it can end up paying far more than it needs to. Public cloud services generally offer tools to help IT admins keep track of which cloud instances are being used and how much storage, network, memory and central processing unit (CPU) workloads consume. But it is often hard for an individual user to find these metrics given the way cloud services tend to be procured.
According to Densify, many businesses have multiple AWS or other public cloud accounts, that roll up into a master corporate account. This means the people who pay the cloud bills rarely understand the reasoning behind the expense, Densify said.
Internal users who then take chunks of cloud service from the main account are only aware of the demands their own cloud instances require. Their applications may need different usage patterns in terms of storage, CPU and memory, compared to other parts of the business.
Densify said this means they may have no knowledge of the ultimate cost to the organisations of running their cloud instance. In fact, it reported that 35% of those businesses surveyed admitted their cloud spending was over budget.
Most companies overspending
Ayman Gabarin, senior vice-president, Europe, Middle East and Africa at Densify, said: “Because of the lack of control and manageability of the cloud, most organisations overspend. In almost all cases of our interactions with customers, they set one budget, and the skyrocketing costs blows their budget.
“A very large department store that recently purchased the Densify service had set a budget of $120,000 per month for cloud usage. Their cloud usage within six months had shot up to $800,000 per month. We see this sort of thing happening all the time. And unfortunately in most cases, the companies continue to pay the cloud suppliers as they assume that’s normal.”
The survey found that about a quarter of respondents do not audit (or do not know if their organisation audits) their cloud usage and costs, and only 20% use some sort of automation tool to optimise infrastructure needs.
Read more about cloud optimisation
“There is a balance of power issues going on in most organisations,” said Yama Habibzai, chief marketing officer of Densify. “The people that run applications in the cloud come to those that manage the budget continuously to ask for more funding, because the applications are core to their business.
“Any issues with the applications will directly impact the function of the business. Therefore, the financial teams feel cornered to continue to pay for the cloud usage, and they don’t necessarily understand the usage and the technology to control cost. We do not believe teams compensate in ways to find savings. Spending is going up, without a lot of hard effort by the DevOps teams to find ways to save money.”
As Computer Weekly has previously reported, many organisations struggle to keep track of cloud usage. For instance, during a pilot using Azure at Reading university, the IT department found that one academic forgot to switch off a virtual machine over the weekend, leading to a £50,000 bill.
Complexity is set to escalate, with 90% of organisations planning to deploy multiple clouds in the next few years, according to analyst IDC. Multi-cloud management is an emerging area of cloud computing aiming to tackle this complexity.
IDC defines multi-cloud management as a set of technologies that are used to consistently configure, provision, monitor and optimise the use of all types of public and private cloud resources, as well as traditional IT, in a way that ensures consistent delivery of SLAs, security, and compliance policies while optimising costs and promoting business agility.
Densify is among a growing number of companies targeting cloud management and specifically, the ability to optimise public cloud usage based on automation and machine-learning level of analytics. One of its customers, a US energy company, used the Densify tool to identify AWS savings of $85,000 per month. The AWS analysis also revealed 29 instances that were not being used, according to Densify.
The company previously specialised in virtualisation management. Its tools could be used, for instance, to help IT departments get the most from their VMware licences or avoid hefty Oracle virtualisation licences. Densify now appears to be applying its expertise in virtualisation optimisation to the public cloud.
The company makes a bold claim that its optimisation can out-perform human admins. “Densify analyses customer cloud environments 24/7, leverages all the technologies that are available and makes the best recommendations – even comparing cloud suppliers across the market. No human, or even teams of humans, can do this on a regular basis manually,” said Habibzai.