Over-allocation kills cloud savings

When it comes to the cloud and Amazon Web Services, IT administrators often buy far more than they need and fail to adjust to realities once they have a good understanding of their deployment's needs. These are the findings of Cloudyn, a cloud cost management provider.

Cloudyn estimates that some cloud adopters are wasting on average 40 percent of their annual expense on AWS resources they don't use. The reasons why vary: resources are often over-allocated, instances are left running after they are no longer needed, or even failing to take advantage of Amazon's own cost-cutting offerings.

Forrester Research principal analyst James Staten argues long-standing beliefs in IT are what causes us to so dramatically overestimate our needs. "The first rule we learned about capacity planning was that it's more expensive to underestimate resource needs and be wrong than to overestimate, and we always seem to consume more resources eventually", he says.

With the cloud this overplanning isn't as beneficial, and effectively erases one of the platform's biggest advantages, cost savings, if you don't get rid of what you don't need. This seems to indicate most cloud users could be saving a lot more if IT administrators just took a few minutes to review their cloud strategies and usage, Staten suggests.

A common error among AWS users seems to be a general pattern of allocating large or extra large instances when a small or medium instance would do. This led to a 17 percent utilization among the 400,000 instances Cloudyn monitored. Worse yet, among the extra large instances that utilization dropped to four percent, which are eight times as expensive as the small instances.

Cloudyn also found that many instances are left running and unused for days or even months at a time, even worse than underutilization because they aren't being used at all.

One way to fight ballooning cloud costs on AWS for computing power you might not immediately need is the Reserved Instance program. This allows the user to purchase a block of instances ahead of time and at a reduced cost to save money. Cloudyn says that most of the deployments in its study were not taking advantage of this program.

"This one takes longer to assess, but once you know you will be staying in the cloud for a year or more, there's no excuse not to take advantage of this", Staten argues.

To further this point Staten brings up the deceptively low cost of the instances themselves. While a medium instance will cost you 32 cents per hour, over the course of a year that is $2,800. If an IT department is not making full use of that instance, that is a significant amount of money -- especially considering there will be dozens more instances just as equally unused.

"It heavily behooves you to give back what you aren't using," Staten says. "Because you are paying for what you allocated whether you are really using it or not".

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