Cloud Costs a Rising Concern Among Businesses
Business cloud adoption soars, and so do concerns that costs are reaching dizzying heights
A series of recent surveys confirm what was reported in cloud vendor earnings reports: Business adoption of cloud infrastructure and application services is soaring. While companies like Amazon Web Services, Microsoft Azure, IBM, and Google Cloud are reaping the benefits of this widespread adoption, businesses are increasingly concerned about the cost of services.
The Lowdown: According to
The issue many businesses face — from enterprises to SMBs — is controlling the cost of cloud services and instances. A benefit of cloud computing is fractionalizing cost through recurring payments (or recurring revenue to the vendors and resellers), but many businesses are discovering that cloud computing fees stack up quickly as more providers and services are added to the mix.
In 2018, the average SMB spent up to $120,000 a year on cloud services. The average enterprise spent between $1.2 million and $2.4 million on infrastructure and application services. Thirteen percent of enterprises spent more than $12 million a year on cloud providers.
The Details: According to a separate study by Densify, 45 percent of enterprises believe they’re overspending on cloud services, and 10 percent of respondents said they’re at least 100 percent over budget on cloud costs.
In the RightScale survey, 68 percent of respondents said they have managers or cross-functional teams dedicated to understanding, managing, and optimizing the cost of cloud services. Another 84 percent of the RightScale survey-takers said they’re challenged in managing their cloud services — up from 69 percent in 2018.
The Impact: The growth rate of the cloud computing market shows no signs of slowing. According to the RightScale survey, 58 percent of businesses plan to move more workloads to the cloud, 39 percent plan to adopt a cloud-first strategy, and 29 percent plant to migrate on-premises software to cloud environments. At the same time, 64 percent say they’ll focus on optimizing their cloud use to produce cost savings and 35 percent are looking for greater accountability of cloud costs.
Densify surveys could indicate that customers will start pushing back on cloud costs or scrutinizing cloud contracts.
The surveys point to the need for cloud vendors and solution providers to focus more on demonstrating return on cloud investments and the total cost of cloud ownership. According to the RightScale survey, many customers don’t understand the value or the benefit derived from cloud investments. Vendors and solution providers will likely need to look beyond the cost
The Buzz: “People have been somewhat surprised as they expand services that cloud computing is not as cheap as they were expecting,” said Rackspace CEO Joe Eazor.
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