Cloud cost mismanagement can drain your finances

Cloud cost mismanagement can drain your finances

The shift to the cloud is expected to account for more than $1 trillion in global IT spending by 2020 as companies of all shapes and sizes adopt the technology to further improve operations. While this shows the success of cloud-based services in the workplace, a study by ParkMyCloud reveals that businesses should think twice about deploying, as an estimated $14.1 billion in cloud spending is expected to be wasted this year, with $5.3 billion coming from oversized resources and $8.8 billion wasted on idle cloud resources.

Since rising costs is a hot issue in the country nowadays, overspending on the cloud is not an option for organizations. We break down below how these runaway costs are incurred and can be avoided.

A possible reason for overspending lies in the cloud’s instant and on-demand scalability feature, which executives tend to go overboard with. Expansion happens quickly in a company that utilizes the cloud and the technology is relatively cheaper and easier to handle compared to traditional technology because resources are intangible and not physical. In addition, most cloud services use a “pay-as-you-use” pricing model. Taking all of these into consideration, managers tend to not worry about controlling or limiting the expansion of cloud instances and services, leading to spending going unchecked or mismanaged.

Cloud instances or servers that are being maintained but not used are another common culprit. When an online store, for example, experiences a sudden spike in web traffic, they can get in touch with their cloud provider to give them additional infrastructure to avoid crashing. However, once the peak period passes, there are businesses that tend to keep these instances instead of discontinue them, thus wasting money.

Aside from paying for unused resources, additional costs can emerge due to the industry having no real standardization when it comes to pricing. In computing the total cost, providers may add several factors such as bandwidth, storage, distribution, and more, and the prices of these vary.

Apart from all of these, the operating system used and the location also causes rising cloud costs, but the main reason for overspending is the lack of proper tools for tracking and measuring usage in companies.

Optimize or lose money

To manage the costs, companies should tap a provider with systems that are compatible with virtually every software to remove any hurdles. IPC CloudServers, powered by global partner CloudSigma, is one such service, capable of running any x86-based operating system, including the most common ones like Windows, Linux, and UNIX. This feature of full compatibility allows organizations to save money since they won’t need to buy multiple software and operating systems.

More importantly, businesses must closely monitor and track their services usage. For fear of under-provisioning, customers usually end up over-provisioning, so the key to reduce wasted spending is to avoid over-provisioning. If companies can track their services usage and find meaningful repetitive patterns, they can confidently change their provisioning or create usage schedules based on the patterns. These schedules may start and stop services, set resource provisioning at desired levels at appropriate times, use different types of resources at different times, etc. This is a good practice when the overall number of instances is small and when the patterns are obvious.

Costs are rising at an incredible pace nowadays and everyone’s affected by it, companies included. Since they already spend a lot just to maintain operations, businesses need to manage their expenditures carefully now more than ever or else suffer further losses and even risk closing up shop.