Overspending on Cloud? Rein in the largest utility - ParkMyCloud

Overspending on Cloud? Rein in the largest utility

cloud-as-utilityHere at ParkMyCloud, we’re always trying to solve a problem many companies are facing: overspending on cloud. As we now support Microsoft Azure along with Amazon Web Services (AWS), we have spent significant time over the past several weeks talking with analysts, writers, and industry pundits about this problem and our vision for our customers and the ParkMyCloud platform. What is interesting in these discussions is the current size of the public cloud IaaS market ($23B in 2016) and the growth rate (28% in 2016).

The Size of the Massive Public Cloud “Utility”

Most analyst reports clearly state that AWS is the public cloud market leader, with at least 3X the size of Azure in terms of market share, generally measured by revenue. AWS has roughly 31-33% of the public cloud market, while Azure has roughly 11%, followed by IBM Bluemix and Google Compute Engine. All are growing rapidly. In fact, according to analyst reports, the “Big 4” are growing anywhere from 50-100% year-over-year. In fact, each of the Big 4 providers are growing much faster than the industry average – it is a truly disruptive, transformational time in IT.

What comes with this growth is greater adoption. According to Gartner, at the end of 2016 only 14% of enterprise workloads were in the public cloud, but by 2020 they expect that to grow to 41%. That basically means the public cloud needs to triple in size to support this workload migration to public cloud (assuming it’s not already “overbuilt” and new technologies don’t drastically shrink the infrastructure needed to support applications). At these current growth rates, the public cloud infrastructure market will be a $60B+ industry by 2020. This will be one BIG $%# market, right?

Public Cloud: The “Utility” for Enterprises

One way to think about the public cloud is as a “utility” – you can buy services on demand, just like electricity, or water, or heating. Each of these utilities are consumable – as you grow you can consume more, as you shrink you can consume less – it’s elastic. Seems like an interesting parallel to compute, databases, and storage. In the case of the public cloud, you are consuming IT-related infrastructure and services to build, test, and run enterprise and consumer applications which we consume either as an enterprise (e.g., Salesforce) or a consumer (e.g., Netflix) .

But like any utility, there is waste – lights are left on, faucets leak or are left running, and the heat running when you are not home, I am guessing you get the gist. This is why there are now consumer applications like Nest. Buildings and homes alike have ‘automated’ ways to turn lights and water off/on to reduce waste and save money and protect the environment. Why should the public cloud be any different?

Overspending on Cloud Expected to Grow

Enter the problem of overspending on cloud, or cloud waste – servers left running when people are not using them (at nights and weekends), oversized databases and servers not optimized for the applications they support, and storage volumes not being used or “lost” in the cloud. These are just a couple examples, there are many more.

This overspending is a huge problem in the cloud market.

Let’s break it down on the 2016 numbers:

2016 / In Billions
Size of Public Cloud IaaS $23B
Non-production Public Cloud IaaS $10B
Cloud Waste $6B

 

So, we calculate that enterprises can save up to $6B by optimizing their public cloud spend in just 2016, and by 2020 that number grows to $17B.

Sounds like it’s time to use a “Nest for the Cloud” tool to reduce overspending on cloud and eliminate waste.


About Jay Chapel

Jay Chapel is the CEO and co-founder of ParkMyCloud. After spending several years in the cloud management space, Jay saw that there was no simple solution to the problem of wasted cloud spend - which led him and co-founder Dale Wickizer to start ParkMyCloud in 2015. Before that, he spent 10+ years with Micromuse and IBM Tivoli, a provider of business infrastructure management software. After an acquisition by IBM, he led the successful sales integration and subsequent growth of the IBM Tivoli/Netcool business in Europe. He also held several regional and worldwide sales roles in Switzerland, the UK and the US. Jay earned both a BA in Finance and an MBA from West Virginia. Those few hours a month that Jay’s not busy with ParkMyCloud’s growth and success, you can find him on the ski slopes, on the soccer field, or on the golf course often accompanied by his three kids.

2 responses to “Overspending on Cloud? Rein in the largest utility”

  1. […] big is the problem? In 2016, enterprises spent $23B on public cloud IaaS services. We estimate that about $6B of that was wasted on unneeded resources. The excess expense known as “cloud waste” comprises several […]

  2. […] big is the problem? In 2016, enterprises spent $23B on public cloud IaaS services. We estimate that about $6B of that was wasted on unneeded resources. The excess expense known as “cloud waste” comprises several […]

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