In recent years, enterprises have begun to trend more favorably toward a more digital business. When COVID-19 hit, this trend accelerated.
This has made it more difficult to track cloud-related costs, which means that finance, IT and operations teams are finding it harder to both manage their company’s cash flow as well as setting cloud usage rates to a reasonable level.
A May 2021 survey conducted by Anodot, an autonomous monitoring company, polled over 100 professionals in the areas of finance, IT and operations about their cloud computing costs in terms of operating as a remote business and as businesses become hybrid after the COVID-19 vaccine rollout.
Of those polled, 80 percent of the organizations responded that they are unable to be immediately notified when their cloud costs spike. Moreover, more than 25 percent of those surveyed said their lag time between cloud cost spike and notification ranges from days to weeks (or even months) before they’re made aware of the price increases.
Shockingly, organizations that are spending more than $2 million on cloud computing were less knowledgeable about their cloud costs than businesses who were spending less. What’s more, 77 percent of businesses who are spending more than $2 million were shocked they were spending that much.
Another surprising finding was that almost half of those surveyed responded that on days where their workers used their cloud data/services heavily, their costs could go up by 10-19 percent.
Additionally, roughly 60 percent of those surveyed reported that it took their system several days to indicate when their organization lost money due to increased cloud costs. This delay typically resulted in a nearly 10 percent financial impact.
Experts suggest that the cloud spending for 2021 is only expected to grow further. Spending could rise as much as 18 percent over last year’s spending, which would equal almost $305 billion. This figure also equates to cloud spending rising to 14 percent of the total amount of IT budget spending.
One of the most effective ways to combat this increase in cloud computing costs is by employing an AI-centric cloud monitoring service. These services work by recognizing spikes in cloud usage and resolving them before an excessive amount of money is spent. Additionally, they are also able to forecast where future spending may occur, thus allowing organizations the ability to plan for the increase.
Real-world example
One company that has been struggling with increasing cloud computing costs is the Israel-based campaign management software company, Kenshoo.
According to Kenshoo’s DevOps group manager, Danny Zalkind, it can be very easy to lose track of spending once everything goes to the cloud. He feels that “[s]ome of it is slow leaks and some of it could be human mistakes, misconfiguration.”
Specifically, Kenshoo recently experienced a nearly $40,000 hiccup. An employee accidentally chose the wrong EC2 instance and, over a couple of days, the company’s bill rose to $40,000 more than usual in cloud computing costs.
There have also been instances where cloud GPUs were left spinning after projects were completed.
Before the increases in cloud costs began, Kenshoo was spending between $150,000 and $200,000 a month on cloud expenses. When usage rose, this price rose to $500,000. Zalkind blames this increase on a mixture of normal growth and cloud instance misconfigurations.
Contributing to Kenshoo’s cloud increases is also a business acquisition that estimatedly will increase their normal cloud spending to $300,000 a month, in addition to their 10 to 15 percent spending bill growth.