Overprovisioning and leaving cloud resources on are two enormous sources of wasted spend.
Wasted spend drags down IT budgets – of particular importance as we enter 2021. The Flexera 2021 State of Tech Spend report found that the biggest change in key IT initiatives from 2020 to 2021 was in cost savings, with the percent of respondents ranking cost savings as a top initiative tripling year-over-year.
It’s important that this is being recognized. Based on data collected by Gartner, we estimate that wasted spend will exceed $26.6 billion this year.
Where the Wasted Cloud Spend is Coming From
Gartner estimates a total market spend of $304 billion on public cloud services end-user spending in 2021, as broken out in the table below. Their estimate for the proportion of that spent on Infrastructure as a Service (IaaS) is $65.3 billion. While wasted spend can be found in any area of cloud spend, customers tend to see the largest amount in these two areas, as well as finding it easiest to identify.
Cloud resources can be considered “idle” when they are running while not being used. For example, when development servers are left running overnight and on weekends when they’re not needed. Since compute resources are paid for by the minute or second, that’s a large portion of the week they’re being paid for but not used (and yes, this applies even if you have reservations.)
Our data shows that about 44% of compute spend is on non-production resources. If we estimate that non-production resources are only needed during a 40-hour work week, the other 128 hours (76%), the resources are sitting idle.
Applying that to the Gartner IaaS number, we estimate that up to $14.5 billion will be wasted on idle resources this year.
Overprovisioning occurs when a larger resource size is selected than is actually needed. There is a mindset of safety behind this, as of course, no one wants their applications to be under-resourced.
But the overprovisioning occurring is far beyond what is necessary, given the elasticity of the cloud. About 40% of instances are sized at least one size larger than needed for their workloads. The cost can be cut in half by reducing an instance by one size, while downsizing by two sizes saves 75%.
Many of our customers show a large percentage of their resources are oversized, but bringing this to a conservative estimate of 40% of resources oversized by one size, giving us a savings per resource of 50%, we estimate that up to $8.7 billion is wasted due to overprovisioning.
Orphaned Volumes and Snapshots
Another significant source of waste is orphaned volumes and snapshots. These are resources that have been detached from the infrastructure they were created to support, such as a volume detached from an instance or a snapshot with no volume attachment.
Our customers spend approximately 15% of their bills on storage, and we found that about 35% of that spend is on unattached volumes and snapshots. Applying that to the Gartner spending numbers, we estimate that up to $3.4 billion could be wasted this year on orphaned volumes and snapshots.
Reducing Wasted Spend
Altogether, this gives us an estimate of $26.6 billion to be wasted on unused cloud resources in 2021. This waste estimate is just based on the three prominent sources of cloud waste. It does not include wasted spend on Platform as a Service (PaaS), which makes up $55 billion in cloud spend according to Gartner’s estimates, nor from SaaS, unused reservation commitments, inefficient containerization, and other areas of the bill.
Attacking the three problem areas above is a great area to start for nearly all public cloud users. Here at ParkMyCloud, we’re on a mission to do just that. See how and try it out today, to do your part in reducing wasted cloud spend.
G2 Cloud Cost Management Winter 2021 Report Ranks ParkMyCloud First in Relationship
December 18, 2020 (Dulles, VA) – ParkMyCloud, provider of the leading enterprise platform for continuous cost control in public cloud, was rated #1 in user satisfaction in G2’s Cloud Cost Management Winter report for the third consecutive quarter.
“The proof is in the ROI,” said ParkMyCloud VP Jay Chapel. “When users see the benefits of savings immediately, that contributes to this level of satisfaction. I’d also like to thank all of our users who give us constant feedback. We rely on your input to continue innovating, to create the best user experience, and to implement continuous cost optimization for all public cloud users.”
With more than one million reviews of business software, G2 is a trusted authority for business professionals making purchasing decisions. Its quarterly reports are based on reviews by real, verified users, who provide unbiased ratings on user satisfaction, features, usability, and more.
In the report, ParkMyCloud the highest satisfaction score among all cloud cost management products at 93%, as well as 92% in ease of administration, 92% in ease of doing business with, 91% in ease of use, 90% in quality of support. Additionally, 91% of users were likely to recommend the product. Highest-rated features included ParkMyCloud’s scheduling, automation, and usage monitoring features as highest.
This is demonstrated in customers’ own words in reviews on G2. One customer recently wrote, “I have worked in consultancies that helped clients with their Azure configuration and there was never a case where money wasn’t being wasted. It is common to find entire virtual machines costing hundreds of dollars that are no longer being used. Having ParkMyCloud keep an eye out for this kind of issue means this will never happen at my current organisation … it paid for itself in the first month. We continue to make gains each month as our cloud use evolves.
ParkMyCloud, a Turbonomic company, provides a self-service SaaS platform that helps enterprises automatically identify and eliminate wasted cloud spend. More than 1,500 enterprises around the world – including Sysco, Workfront, Hitachi ID Systems, Sage Software, and National Geographic – trust ParkMyCloud to cut their cloud spend by tens of millions of dollars annually. ParkMyCloud allows enterprises to easily manage, govern, and optimize their spend across multiple public clouds. For more information, visit www.parkmycloud.com.
Q3 2020 earnings are in for the ‘big three’ cloud providers and you know what that means – it’s time for an AWS vs Azure vs Google Cloud market share comparison. Let’s take a look at all three providers side-by-side to see where they stand.
Note: several previous versions of this article have been published. It has been updated for November 2020.
AWS vs. Azure vs. Google Cloud Earnings
To get a sense of the AWS vs Azure vs Google Cloud market share breakdown, let’s take a look at what each cloud provider’s reports shared.
Amazon reported Amazon Web Services (AWS) revenue of $11.6 billion for Q3 2020, compared to $8.9 billion for Q3 2019. AWS revenue grew 29% in the quarter.
Across the business, Amazon’s quarterly sales increased to $96.1 billion, up 37% and beating predictions of $92.7 billion. The net income of $6.3 billion was the highest in a single quarter yet for the giant, driven by online shopping during COVID-19 – though note that the company is careful to note the $2 billion in costs related to COVID-19 this quarter, as well as $4 billion last quarter and $4 billion for Q4. And AWS? It made up 12.1% of Amazon’s revenue for the quarter – and 57% of its operating income.
AWS only continues to grow, and bolster the retail giant time after time.
One thing to keep in mind: you’ll see a couple of headlines pointing out that revenue growth is down and/or highlighting the fact that it’s flattening out, quoting that 29% number and comparing it to previous quarters’ growth rates, which peaked at 81% in 2015. However, that metric is of questionable value as AWS continues to increase revenue at this enormous scale, dominating the market (as we’ll see below).
AWS announced customer wins for the quarter including payments technology company Global Payments, biotechnology company Moderna, restaurant chain Jack in the Box, visual effects company Weta Digital, household appliance manufacturer Arçelik, and more.
While Amazon specifies AWS revenue, Microsoft only reports on Azure’s growth rate. That number is 48% revenue growth over the previous quarter. This time last year, growth was reported at 51%. As mentioned above, comparing growth rates to growth rates is interesting, but not necessarily as useful a metric as actual revenue numbers – which we don’t have for Azure alone.
Here are the revenue numbers Microsoft does report. Azure is under the “Intelligent Cloud” business, which grew 20% to $13 billion. The operating group also includes server products and cloud services (22% growth).
The lack of specificity around Azure frustrates many pundits as it simply can’t be compared directly to AWS, and inevitably raises eyebrows about how Azure is really doing. Of course, it also assumes that IaaS is the only piece of “cloud” that’s important, but then, that’s how AWS has grown to dominate the market. EVP and CFO Amy Hood highlighted demand for cloud offerings as a key driver to Microsoft’s current and future revenue. Office Commercial and consumer products are both growing – unsurprising in the work-from-home era. Additionally, Microsoft Teams has reached 115 million daily active users, up from 75 million in April.
However, overall, Microsoft exceeded analyst expectations in the second full quarter of the COVID-19 pandemic, with overall revenue coming in at $37.2 billion vs. $35.7 billion expected.
This quarter, Google Cloud, which includes Google Compute Engine and G Suite, generated $3.44 billion in revenue – a growth of 45% year-over-year.
Overall, Alphabet’s revenue increased 14% year-over-year to $14.17 billion. Ruth Porat, Alphabet’s CFO, reported that Google Cloud Platform’s growth rate was meaningfully above cloud overall. Headcount growth is planned to focus on Google Cloud in the next quarter.
Next quarter, Alphabet will break out Google Cloud as a separate reporting segment to show the scale of investments. They will also disclose full-year Google Cloud results back through 2018.
Cloud Computing Market Share Breakdown – AWS vs. Azure vs. Google Cloud
When we originally published this blog in 2018, we included a market share breakdown from analyst Canalys, which reported AWS in the lead owning about a third of the market, Microsoft in second with about 15 percent, and Google sitting around 5 percent.
In 2019, they reported an overall growth in the cloud infrastructure market of 42%. By provider, AWS had the biggest sales gain with a $2.3 billion YOY increase, but Canalys reported Azure and Google Cloud with bigger percentage increases.
It seems clear that in the case of AWS vs Azure vs Google Cloud market share – AWS still has a substantial lead, and their market share remains steady.
Bezos has said, “AWS had the unusual advantage of a seven-year head start before facing like-minded competition. As a result, the AWS services are by far the most evolved and most functionality-rich.”
Our anecdotal experience talking to cloud customers often finds that true, and it says something that Microsoft isn’t breaking down their cloud numbers just yet, while Google admits they’re behind but leans in.
AWS remains far in the lead for now. With that said, it will be interesting to see how the actual market share numbers play out over the coming years.
Among the many ways to purchase and consume Azure resources are Azure low priority VMs and Spot VMs. These virtual machines are compute instances allocated from spare capacity, offered at a highly discounted rate compared to “on demand” VMs. This means they can be a great option for cost savings – for the right workloads. And we love cost savings! Here’s what you need to know about these purchasing options.
How Interruptible VMs Work
The great part about both of these options is the price. Depending on the options selected, you can get a discount of up to 90% compared to the pay-as-you-go price. However, this is in exchange for the possibility that these VMs will be “evicted” when Azure needs the capacity, which makes them suitable for fault-tolerant applications such as batch processing, rendering, testing, some dev/test workloads, containerized applications, etc.
Azure Low Priority VMs
There are two key things to know about Low Priority VMs. The first is that they are only available through Azure Batch, Azure’s tool for running large-scale parallel and high-performance computing jobs through a pool of compute nodes (VMs). Through Azure Batch, you can run jobs and tasks across compute pools called “batch pools”. Since batch jobs consist of discrete tasks run using multiple VMs, they are a good fit to take advantage of low priority VMs.
Note that prior to February 2020, Low Priority VMs were available in Azure Scale Sets, but that option has been discontinued, with Spot VMs now available in Azure Scale Sets instead.
The second highlight is that Low Priority VM pricing is at a fixed discount of 60-80% compared to pay-as-you-go.
Azure Spot VMs
As of May 2020, Azure offers Spot instances/VMs in addition to Low Priority VMs. Like Low Priority, the Spot option allows you to purchase spare capacity at a deeply discounted price in exchange for the possibility that your VM may be evicted. You can choose whether or not to have a cap on the price you’re willing to pay for Spot VMs. Unlike Low Priority, you can use the Azure Spot option for single VMs and scale sets. VM scale sets scale up to meet demand, and when used with Spot VMs, will only allocate when capacity is available.
Your Spot VMs can be evicted when Azure needs the capacity, or when the price goes above your maximum price. You can choose to get a 30-second eviction notice and attempt to redeploy.
The other key difference is that Azure Spot pricing is variable, and based on the capacity for size or SKU in an Azure region. Prices change slowly to provide stabilization. The price will never go above pay-as-you-go rates.
When it comes to eviction, you have two policy options to choose between:
Stop/Deallocate (default) – when evicted, the VM is deallocated, but you keep (and pay for) underlying disks. This is ideal for cases where the state is stored on disks.
Delete – when evicted, the VM and underlying disks are deleted.
While similar in idea, there are a few key differences between these two purchasing options:
Single VMs, VM scale sets
Variable pricing; ability to set maximum price
Preempted when Azure needs the capacity. Tasks on preempted node VMs are requeued and run again.
Evicted when Azure needs the capacity or if the price exceeds your maximum. If evicted for price and afterward the price goes below your maximum, the VM will not be automatically restarted.
Azure Extra Capacity Options vs. AWS Spot Instances
So are low priority VMs the same as AWS Spot Instances? In some ways, yes: both options allow you to purchase excess capacity at a discounted rate.
However, there are a few key differences between these options:
Fixed vs. variable pricing – AWS spot instances have variable pricing while Azure low priority VMs have a fixed price as listed on the website
Integration & flexibility – AWS’s offering is better integrated into their general environment, while Azure offers limited options for low priority VMs (for example, you can’t launch a single instance) with limited integration to other Azure services.
Visibility – AWS has broad availability of spot instances as well as a Spot Instance Advisor to help users predict availability and interruptibility. On the other hand, Azure has lower visibility into the available capacity, so it’s hard to predict if/when your workloads will run.
Should You Use Azure Low Priority VMs?
If you have fault-tolerant batch processing jobs, then yes, low priority VMs are worth a try to see if they work well for you. If you’ve used these VMs, we’re curious to hear your feedback. Have you had issues with availability? Does the lack of integrations cause any problems for you? Are you happy with the cost savings you’re getting? Let us know in the comments below.
Microsoft Azure recently announced an addition designed to help with Azure chargeback: cost allocation, now in preview in Azure Cost Management + Billing. We’re always glad to see cloud providers making an effort to improve their native cost management capabilities for customers, so here’s a quick look at this update.
Chargeback for Cost Accountability
Cost allocation for cloud services is an ongoing challenge. Depending on organizational structure and decisions about billing and budgets, every organization will handle it a bit differently. In some cases, separating by Azure subscription can make this easier, but in others, your organization may have shared costs such as networking or databases that need to be divided by business unit or customer. However, it is an obstacle that must be addressed in order for organizations to gain visibility, address inefficiencies, and climb up the cloud spend optimization curve to actually take action to reduce and optimize costs.
Many IT organizations address this via an Azure chargeback setup, in which the IT department provisions and delivers services, and each department or group submits internal payment back to IT based on usage. Thus, it becomes an exercise in determining how to tag and define “usage”.
In some cases, showback can be used as an alternative or stepping stone toward chargeback. The content and dollar amounts are the same – but without the accountability driven by chargeback. For this reason, it can be difficult to motivate teams to reduce costs with a showback. We have heard teams using variation on showback – ”shameback”. IT can take the costs they’re showing back and gamify savings, coupled with a public shame/reward mechanism, to drive cost-saving behavior.
What Azure Added with the Preview Cost Allocation Capabilities
The cost allocation capabilities are currently in preview for Enterprise Agreement (EA) and Microsoft Customer Agreement (MCA) accounts. It allows users to identify the costs that need to be split by subscription, resource group, or tag. Then, you can choose to move them, and allocate in any of the following ways: distribute evenly, distribute proportional to total costs, distribute proportional to either network, compute, or storage costs, or choose a custom distribution percentage.
Cost allocation does not affect your Azure invoice, and costs must stay within the original billing account. So, Azure did not actually add chargeback, but they did add visualization and reporting tools to facilitate chargeback processes within your organization, outside of Azure.
Improvements in the Right Direction – or Too Little, Too Late?
Azure and AWS are slowly iterating and improving on their cost visibility, reporting, and management capabilities – but for many customers, it’s too little, too late. The lack of visibility and reporting within the cloud providers’ native offerings is what has led to many of the third-party platforms in the market. We suspect there is still a way to go before customers’ billing and reporting needs are fully met by the CSPs themselves.
And of course, for organizations with a multi-cloud presence, the cloud costs generally need to be managed separately or via a third-party tool. There are some movements within the CSPs to at least acknowledge that their customers are using multiple providers, particularly on the part of Google Cloud. Azure Cost Management has done so in part as well, with the AWS connector addition to the platform, but it’s unclear whether the 1% charge of managed AWS spend is worth the price – especially when you may be able to pay a similar amount for specialized tools that have more features.