The Cloud Is Booming But so Is Cloud Waste

Over 90% of organizations will use public cloud services this year. In fact, public cloud customers will spend more than $50 billion on Infrastructure as a Service (IaaS) from providers such as AWS, Azure and Google. This boom is, of course, due to the broader adoption of public cloud services. But, it is also caused by the expansion of infrastructure within existing accounts. Not surprisingly, the growth in spending often exceeds the growth in business. That’s because a huge portion of what companies are spending on cloud is wasted. Before getting to the waste, let’s look a little closer at the growth in the cloud sector. Gartner recently predicted that cloud services spending will grow 17% in 2020 and will reach $266.4 billion. While Software as a Service (SaaS) makes up the largest market segment at $116 billion, the fastest growing portion of cloud spend will continue to be IaaS. This will increase 24% year-over-year and surpass $50 billion in 2020. As cloud computing growth continues and cloud users mature, we might hope that this $50 billion is being put to optimal use. While I personally do find that cloud customers are more aware of the potential for wasted spending than they were just a few years ago, this does not seem to be correlated with cost optimized infrastructure from the beginning. The fact is, it’s simply not a default human behavior. I frequently run reports for companies having issues with cloud waste. Invariably, I find wasted spend in these accounts. For example, one healthcare IT provider was found to be wasting up to $5.24 million annually on their cloud spend an average of more than $1,000 per resource per year.