Up to one-third of cloud computing spending is not tracked and wasted

Latest Flexera survey finds slow adoption of cloud cost management strategies. In an era of multi-cloud, these means a lot to keep track.
Written by Joe McKendrick, Contributing Writer

Why do cloud bills keep spiking every month? How much is marketing spending on cloud services? How much is HR investing in online recruiting tools? Is anyone still using some database instances? Who knows?

Over the past year, organizations have been pushing forward, full steam, into cloud computing. However, questions still persist as to how much is being wasted. 

Photo: Joe McKendrick

The latest analysis coming out of Flexera's State of the Cloud report, based on the experiences of 750 executives, finds that while a great deal of money is being spent in the cloud, accounting where it all goes can still be somewhat of a mystery.

Most companies spend more than a million dollars a year on cloud services, yet they struggle to handle their growing cloud spend. On average, survey respondents estimate 30% of cloud spend is wasted. Flexera actually puts that figure, based on its work with customers, at 35%. Adding to the challenge is the fact that organizations are not taking advantage of all cloud provider discounting -- though adoption is growing. Just over half (52 percent) of AWS users leverage reserved instances and only 46% of Azure users do so. But organizations seem to be moving quickly to adopt the AWS Savings Plan (44% in 2021 vs 30% in 2020), a new offering in 2020 that simplifies discounting.

Companies are also starting to rely on automation to keep cloud costs in check. Users are leveraging automated policies to shut down workloads after hours (49%) and rightsize instances (48%). Just over half, 55%, report that understanding cost implications of software licenses is a top cloud challenge.   

Thirty-six percent of enterprises said their annual spend exceeded $12 million and 83 percent reported that cloud spend exceeds $1.2 million per year. These figures represent an increase over last year, when 20 percent of enterprises reported an annual spend of more than $12 million and 74% reported yearly spend of more than $1.2 million.  

Ninety-seven percent of respondents utilize at least one public cloud, while 80 percent have at least one private cloud. Seventy-eight percent of respondents are using hybrid cloud. Multi-cloud also continues to gain traction, and is the dominant strategy, adopted by nearly all surveyed enterprises. The most common multi-cloud approach among enterprises is a mix of multiple public and multiple private clouds. Private cloud adoption also is strong. VMware vSphere continues to lead in private cloud (36% currently use). Microsoft Azure Stack usage is at 35%; AWS Outpost and OpenStack each have 28%.  

While organizations are using multiple clouds, this doesn't necessarily mean individual applications are spanning clouds, the survey's authors also report. The survey finds apps siloed on different clouds is the most common multi-cloud implementation, with 49 percent of respondents saying they use it. Data integration is the most common type of architecture that spans clouds. However, more than one-third of respondents are using more advanced architectures, such as workload mobility between clouds and individual apps that span public and private clouds.

Multi-Cloud Architectures Used

  • Apps siloed in different clouds     49%
  • Data integration between clouds    45%
  • Workload mobility between clouds   42%
  • DR/failover between clouds    34%
  • Individual apps span public and private clouds  34%

Use of public cloud PaaS services is increasing. Data warehouse has the highest adoption, used by 54%, while 28% of enterprises are experimenting with artificial intelligence and machine learning -- more than any other PaaS services.

Top challenges are security, spend, governance and expertise. Overall, 81% indicate that security is a challenge, followed by 79% for managing cloud spend and 75% each for governance, lack of resources/expertise and compliance.

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