Taking Control of Cloud Spending
UBS shared a lesson in understatement last week when analyst Karl Keirstead wrote, “Customer efforts to optimize/trim their cloud spend are well beyond any historical norm.” One could almost hear the frenzied IT staff yanking blue cables out of servers and powering down the racks. Amazon and Microsoft all fell 2% on the warning, and Google dropped 1.4%.
With tech layoffs coming in at more than 330,000 since early 2022 and about 168,000 job losses just this year, cloud spending is an obvious and looming target, but it’s also a hard target. It sometimes feels like what Wanamaker said about advertising: half of it is wasted, we just don’t know which half.
Brian Schechter at Primary VC brought together many sides of the cloud landscape for a panel on how cloud spending has developed and how to introduce accountability and controls. Here are a few select insights from the panel.
Party on, Cloud. According to Zachary Smith, Head of Edge Infrastructure at Equinix, “One of the biggest problems we see with Equinix’s customers is … they’re not in the business of metering and chargeback. They rely on a point of sale that people effectively put in once every three years to grab as much infrastructure as they can.”
Tail of the Dog. Dataminr Director of Engineering, Nitin Pillai warned that minimizing infrastructure costs can be more like the tail wagging the dog. “It’s not just about infrastructure savings…Developers are also not going to be spending their hard-earned time managing infrastructure. They’re busy writing code that makes your product and earns you money.”
Ask Me Anything, Please. Sometimes organizations owe their overbuying to a lack of controls. How about asking first? Pillai shared, “Because we don’t have the right controls built into the engineering systems, people can just go and provision infra they want. After they’re done, they don’t really go and deprovision them. It’s just sitting there. It’s good for AWS, but it’s costing us a ton of money.” Pillai has saved hundreds of thousands just inventorying idle resources and turning them off.
Moar Services. Datadog Product Manager, Kayla Taylor has been helping with both price and resource optimization, which can help identify and decommission idle resources. For example, “we have a bunch of monitoring data systems. Most of what we’re doing is telling our customers, ‘Hey, let’s surface orphaned resources in a central experience where we can see particular EBS volumes that have been unattached for seven days,’ and we then address or delete them as needed.”
Bottomline – The move to the cloud led to massive, up-front purchases and probable over-builds. Don’t want to weigh your developers down with managing infrastructure when they should be writing code that makes you money, but it can’t hurt to introduce controls around spinning up and winding down services, so you know what’s operational or just idle and bleeding money. Make people ask first, and remind them to turn off the lights. There are tools such as Datadog to help manage this.
That said, it’s not an easy task, and you can see it in Wall Street expectations. UBS sees the problems lasting throughout 2023, suggesting a deep faith in companies’ ability to reign in costs, but many analysts expect the slumping growth rates to bottom by midyear and begin improving through the second half. Maybe those costs are here to stay.
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