How to Reduce Cloud Waste

Cloud spend is increasing.

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In the UK alone in 2023, an estimated GBP £448 billion (approx. USD $565.50 billion) was spent per employee on cloud services. This has a significant impact on the environment, too.

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Meanwhile, respondents of one survey estimated that they waste 32% of their cloud spend...

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In other words, cloud waste is a large and growing problem for many organisations.

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Let's look at how to define cloud waste and devise a plan to identify and reduce it.

What is cloud waste?

Cloud waste refers to paid-for cloud services that go unused or are used in suboptimal ways. It can lead to unnecessary costs accumulating for months or even years.

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This primarily affects companies using cloud services, while cloud service providers do not experience this financial waste in the same manner.

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However, it affects the long-term environmental sustainability of both the cloud providers, and users of cloud services.

Cloud waste example: Over provisioned virtual machines (VMs)

There is a scenario in a financial services organisation where a team provisions VMs to run specific financial applications or data analytics workloads.

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Due to uncertainties in workload requirement or lack of proper monitoring, they may over provision resources beyond what is actually needed. This results in excessive cloud waste.

Why is cloud waste increasing?

Cloud services are relatively new. Many organizations know their benefits better than they understand how they work. This leads them to deploy cloud services without adequate visibility of their overall cloud spending and service usage.

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Cost efficiency on the cloud is higher than for physical servers, which might create a false sense of security about its efficiency.

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Cloud services can carry a high level of complexity, too. There are also different types of cloud solutions and processes. It is, for example, complicated to monitor a hybrid or multi cloud environment.

Main causes of cloud waste

1. Planning errors

Companies might overestimate their demand for cloud services or the demand for their own services in the market.

2. Early tool sign ups

Cloud tools and services are increasingly popular. It's not uncommon for businesses to sign up for these early on and then forget about them.

3. Not optimising cloud resources

Failure to optimise cloud resources can also lead to increased cloud costs.

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IT teams might also be occupied with other priorities and responsibilities and/or be inexperienced with cloud technology.

4. Lack of automation

Automation reduces human errors that lead to cloud waste. It also helps to set limits, automate notifications and improve overall business productivity.

5. Lack of monitoring tools

A lack of monitoring tools and best practices across organisations can lead to resources being overlooked or incorrectly provisioned resources.

6 ways to reduce cloud waste

1. Select the right pricing plan

First decide your cloud budget. This can help you decide the best payment option for your business.

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There are several payment model options for cloud resources, including:

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• On-demand
• Savings plans
• Reserved instances
• Committed use discounts
• Spot instances

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In general, on-demand is the more expensive choice. But flexible pricing models with commitment-based or availability-based discounts are often available.

2. Perform/get a cloud cost analysis

Cloud cost analysis involves identifying and understanding cloud computing costs.

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It links costs to activities and gives detailed cost breakdowns by - for example - customer, team, and project. This information in turn helps with planning effective budget allocation.

3. Rightsize

Rightsizing is a term referring to optimising resources to match specific demands. It is used across IT infrastructure, manufacturing, business, and more.

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It includes analysing instance performance and their usage patterns, then optimising over-provisioned and/or mismatched instances accordingly.

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Rightsizing is essential both when initially setting up cloud resources and when adapting to changing workloads.

4. Use cloud cost management tools

Cloud cost management tools increase businesses' control and visibility capabilities of their cloud resources, which is crucial for understanding which ones are needed and which are causing cloud waste.

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Examples of the latter category might include idle VMs, orphaned resources, and unattached storage volumes.

5. Automate and set limits to cloud cost management

Auto-scaling cloud resources can increase efficiency. However, it needs to be done in the right way or it might quickly add to cloud costs. So, setting cloud scaling limits is essential.

6. Cost-conscious IT culture

Raising teams' awareness and educating them about cloud costs can encourage collective efforts to reduce them. Organization-wide limits and alerts, and generating team-specific usage reports help.

The impact of cloud waste on carbon footprints

Besides its negative impact on business finances and efficiency, cloud waste can contribute to increasing businesses' carbon footprints.

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According to a report by MIT ('The Staggering Ecological Impacts of Computation and the Cloud')":

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The Cloud now has a greater carbon footprint than the airline industry. A single data center can consume the equivalent electricity of 50,000 homes.

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Inefficient usage of cloud resources leads to data centres consuming even larger amounts of electricity than needed.

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About 40 per cent of most data centres' electricity is used on cooling air, which is often carried out by sophisticated computer room air conditioners (CRACs) or computer room air handlers (CRAHs).

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In particularly bad cases, the needless expansion of data centre infrastructure themselves takes place, which consumes more materials and energy.

Conclusion

Cloud waste is an increasingly prevalent issue that poses both financial and environmental challenges. It appears whenever cloud services are underutilised or mismanaged.

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Key causes of cloud waste include:

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• Planning errors
• Premature tool sign-ups
• Failure to optimize resources
• Lack of automation
• Insufficient monitoring and reporting tools

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There are a number of ways to mitigate these factors, before or during the use of cloud services.

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They include things such as selecting appropriate pricing plans, performing full cloud usage and cost analyses, rightsizing resources, and more.

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Reducing cloud waste will enhance performance, lead to cost savings, and reduce the long-term environmental impact on businesses.