Businesses migrate to the cloud for cost savings and scalability.
However, poor cloud management can lead to cloud waste which drains all of the cost benefits of moving to a cloud platform.
Over 30% of cloud spend is wasted every year according to a 2020 report by Statistia.
That’s over $19 billion dollars being spent on unused or improperly provisioned cloud resources (30% of the $64B IaaS cloud market).
That’s why spending and proper provisioning is the biggest challenge in the cloud today.
Companies are now looking to manage cloud costs and streamline cloud services to battle what is known as cloud waste.
Cloud waste is the purchases of cloud resources that go unused or underused.
Often cloud waste stems from over-provisioned infrastructure that ends up being unused or under-used.
The wasteful spending increases operating costs without adding value to the organization.
Cloud cost management is the process in which an organization monitors, forecasts and budgets costs of cloud services in order to optimize spend.
Cloud cost management uses strategies like rightsizing, eliminating inactive storage and instances, using discounted instances for non-critical workloads, roles based access for purchases and using low cost regions.
Proper cloud cost management can save your organization up to 30% on their cloud spend.
Let’s take a closer look at the leading causes of cloud waste as it is often overlooked until it's too late and cloud spend is out of control.
Understanding cloud waste
The Cloud’s growth spurt is gradually turning towards Jevons Paradox, in which ease of access to technology and lower costs drive developers and administrators to consume more.
In economics, the Jevons paradox occurs when technological progress increases the efficiency with which a resource is used, but the rate of consumption of that resource rises due to increasing demand for that resource.
William Stanley Jevons, an 1865 economist, observed that technological improvements that increased the efficiency of coal-use led to the increased consumption of coal in a wide range of industries.
Similar to how cloud computing is easily accessible and over provisioned today.
As the resources are cheaply priced, increased consumption and wastage of cloud resources occurs.
This leads to Cloud sprawl - an unrestricted increase in cloud instances, storage, services and/or providers.
This results in sticker shock - where customers discover the costs to be much higher than initially expected.
Unit costs stay low, but total costs increase.
For instance, playing a video costs you a small amount every time, but this amount could become huge if, say, 1000 people download a 200 MB video.
Apps that have a constant two-way communication between servers can incur huge costs on the cloud.
Some of the unnoticed costs associated with cloud are: Egress charges (Outbound Data Transfer Prices), costs of “Orphan” snapshots after instances are deleted, unused IP addresses, storage of obsolete data, incorrectly allocated storage for rarely accessed data, and more.
What causes cloud waste
Lack of visibility
The company heads/executives do not have a central portal to monitor or organize cloud activities/usage by department/personnel etc.
Improper provisioning
Over allocation of memory and storage makes you pay for something you might not actually need and under provisioning may lead you to spend more or even lead to outages.
Launch and leave
Since the system is highly scalable, your teams may create a pool of virtual machines in high usage periods and later forget to shut them down.
But the meter is continuously ticking and adding to your bills.
Unneeded services
Virtual hardware, like load balancers and VPNs, unnecessary security components, are often upsold to customers and add up to costs quickly.
Complexity of bills
Bills of IaaS providers are very granular and complex.
Customers have to clearly understand bills to know how IaaS is being used, and to avoid being charged for unauthorized services.
Identifying Cloud Costs - The Iceberg Analogy
You might not be aware of how much cloud waste is happening in your organization.
The costs that are apparently visible could just be the tip of the iceberg.
An example of a somewhat hidden cost driver is if you are using an EC2 instance that is not the best fit for your company's environment.
The cost is going to be a lot higher than it should be because your environment is accumulating unnecessary costs.
A single size instance change can save 50% or more of the costs.
Another example from Amazon is that AWS says “You are charged for Amazon Elastic Block Store (Amazon EBS) storage for the amount of storage provisioned to your account.”
Amazon EC2 instances accrue charges only while they're running, but EBS volumes attached to instances continue to retain information and accrue charges, even when the instance is stopped.
To stop Amazon EBS-related charges, delete EBS volumes and Amazon EBS snapshots that you don't need.”
This means that inactive storages can cost you significantly and it’s things like this that can add unnecessary costs.
Cloud Cost Management Solutions
As cloud spend continues to rise, companies are taking initiatives to optimize cloud costs.
Cloud cost management centralizes visibility of your cloud usage making it easy to understand, manage costs, and take action.
Cloud cost management results in higher efficiency, decreased costs, visibility of cloud spend, accountability and predictability that helps in better budgeting and cost optimization.
Enterprises, early-stage companies, and security companies all trust iCompaas with cloud cost management and continuous monitoring solutions.
Can’t I Use My Own Cloud Provider’s Cost Management Service?
Some companies do rely on cost management services provided by their cloud vendor itself, which are significantly more expensive and not as effective (e.g. Amazon CloudWatch is 17% more expensive).
These solutions may not always be the best at optimizing your cloud costs as the result would mean decreased revenue for your cloud provider.
Therefore it’s important to have an independent entity oversee cost management to avoid this conflict of interest.
In addition they only support their cloud and not multi-cloud.
As an example, using the Maker-Checker principle, the principle states that to make a system strong against errors, there should be a two-entity approval flow, where one person creates something and a second person should authorize/validate it.
In this case, the maker (cloud provider) and the checker (cloud provider cloud cost solution) are the same and therefore a conflict of interest might diminish the cost savings.
Use An Independent Cloud Cost Management Provider for Best Results
An independent provider will ensure the most effective savings, free of conflict.
iCompaas solves your cost related problems along with the key services of Regulatory Compliance & Security Posture Management.
iCompaas offers cloud infrastructure cost analysis and tailored savings recommendations.
Centralizing the visibility of cloud usage and costs is essential to understand and manage costs while you grow your business.
iCompaas analyzes cloud infrastructure costs, usage patterns and provides savings recommendations that are customized for your environment as you grow.
iCompaas helps companies reduce cloud spend within their first month.
You could book a short demo here to learn how our cost metering services provide you significant cost savings.
Cloud waste is the purchases of cloud resources that go unused or underused.
Often cloud waste stems from over-provisioned infrastructure that ends up being unused or under-used.
The wasteful spending increases operating costs without adding value to the organization.
As the resources are cheaply priced, increased consumption and wastage of cloud resources occurs.
This leads to 
As an example, using the