Why Automating Cloud Cost Optimization is Critical in These Coronavirus Days

by Leor Farkas | March 24, 2020
Why Automating Cloud Cost Optimization is Critical in These Coronavirus Days

In just a few short weeks, the longest bull market in history has come to an end. As the novel coronavirus (COVID-19) spreads across the world, ravaging communities, businesses are also contending with uncertainties about how they will weather this storm. Consumer spending is down, venture capitalists could tighten their belts, and layoffs have already commenced across industries..

During these rocky economic times, when every dollar counts more than ever, the last thing businesses need is to waste money on their cloud costs. Many organizations are going to be facing tough budgetary decisions regarding personnel changes and fundraising terms. Fortunately, the decision to get serious about eliminating cloud cost waste isn’t just a no-brainer. It’s also one of the least painful, easy ways companies can save significant money in this challenging environment.


Cloud cost waste is rampant

According to Gartner, public cloud spending is predicted to grow 17% in 2020 to reach $266.4 billion. Of this spend, the fastest growing market segment is infrastructure as a service (IaaS), which is anticipated to grow 24% year over year and reach $50 billion in 2020.

If we look at compute resources only, approximately two-thirds of cloud spend goes to compute. Unfortunately, much of it goes to waste. Stanford lecturer Dr. Jonathan Koomey found that on average, companies spend 36% more on their cloud services than they actually need to. With spend on data storage forecasted to reach $205 billion in 2020, companies worldwide could save $73.8 billion this year by optimizing their workloads.

According to Koomey’s report, 75% of companies actually see an increase in cloud costs when they migrate their server data to the cloud. But of the companies he studied, 100% of them would save money if they properly determined how much server space they actually needed, and fixed issues like oversized and idle resources.

Understandably, some companies are reticent about reconfiguring their cloud storage usage because they’re afraid of breaking something. Others are preoccupied with other tasks and simply never got around to dealing with their cloud costs.

Yet many enterprises are indeed committed to tackling the problem of cloud waste, and have even established cloud centers of excellence and hired dedicated personnel to manage their cloud. Unfortunately, these efforts largely lead to slowed operational processes and to 40% of enterprises spending more on cloud than they budgeted for. Rather controlling their cloud costs, enterprises that implement complex manual processes end up wasting valuable employee time and further draining funds.


The coronavirus recession and cloud costs

During a bull market, like the one we enjoyed for the past 11 years, businesses are focused on growth. Careful spending is deemphasized in favor of scaling fast. Unfortunately, the coronavirus has brought all of this to a crashing halt in a matter of weeks. And businesses are scrambling to adjust their approach.

Departments that were looking to hire new employees are now in a hiring freeze, and in some cases considering lay-offs.

CEOs who were confident of reaching their quarterly revenue goals are now having doubts whether they can pull through in light of waning sales.

Companies who were just a month or two ago planning their next big round of funding may see VCs pulling back.

Now that we’re in bear market territory, companies are more concerned about extending their run rates and simply surviving this period. Growth and scalability have taken a back seat to more urgent concerns, like maintaining cash flow and reducing inessential or wasteful expenses.

That’s why there is no better time for organizations to get serious about cutting down their cloud cost spend in the most efficient way possible.


Reduce cloud waste with zero overhead or manual effort

During these uncertain times, businesses need a way to trim the fat off their spend in preparation for unknown challenges ahead. By adopting an automated solution that predicts companies’ monthly spend and identifies anomalies, DevOps teams can stop fire-fighting their cloud cost optimization and let algorithms do all the heavy lifting.

Cloudvisor allows companies to do all this without compromising infrastructure stability or adding overhead costs. It is the only solution of its kind that works in real-time and makes sure companies benefit from the steepest discounts with coverage of over 90% of the entire EC2 infrastructure.

Armis, a leading IoT security company, saves over 40% in cloud costs annually using Cloudvisor’s cloud cost optimization solution. Many of Cloudvisor’s enterprise companies enjoy similar results, freeing up precious budget for business-critical activities during these tumultuous times.


The bottom line

The coronavirus has jolted companies’ attention from growth to preservation. As the recession deepens, companies are beginning to face pressure to do more with less. One easy and efficient way to dramatically save money is by implementing a cloud cost optimization solution. Unlike tougher calls, such as layoffs and budget cuts, this is one area where saving on costs is a no-brainer.



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