Cloud is costly, but it shouldn't have to be

Cloud dollars

Cloud's meteoric rise to become the dominant system for IT infrastructure has only been accelerated by the pandemic. The capacity of the cloud to rapidly run workloads with flexibility and scale is something that is rarely matched by onsite IT infrastructure; a capability that has become more essential during the pandemic induced changes to working patterns and business operations. Indeed, according to Flexera’s 2021 State of the Cloud Report, 90 percent of firms slightly or significantly increased their cloud usage due to the pandemic.

As cloud services’ dominance looks set to continue, businesses are utilizing cloud platforms to drive innovation in emerging technologies. Businesses can now scale up their operations in areas like artificial intelligence with ease, allowing them to tap into fluctuating customer desires so as to deliver tangible value to the business. 

The development of container technology has been a key driver in enabling this new cloud-native world. Containers enhance cloud flexibility, by allowing developers to package up software code and easily test, deploy, and run applications that are needed for businesses functionality. The portability of containers also allows workloads to be moved across IT infrastructure with ease. Kubernetes is the primary developer tool for supporting developers to manage and optimize these containerized workloads, helping businesses to scale. Research from Civo found that 90 percent of enterprises using Kubernetes are running it in the cloud. 

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Despite the growing use of cloud technology, costs and service charges continue to be a significant check on the ability of businesses to use cloud to scale up and innovate. 

Cloud Spend

Gartner predicts worldwide end-user spending on public cloud services will grow from 23.1 percent in 2021 to $332.3 billion, up from $270 billion in 2020, representing unseen levels of investment in cloud services. 

Alongside this record investment in cloud, user overspend on cloud services is rife. Research from Densify suggests enterprises may be overpaying as much as 42 percent on cloud, with much of this down to the growth in 'cloud sprawl'. Businesses that are all too eager to expand their cloud presence and adopt new computing resources are neglecting current workloads and assets in the process, leaving them underutilized.

The culpability for this overspending, however, is not on individual businesses but on the billing systems used by large cloud providers. Of the 1000 cloud developers Civo surveyed, a staggering 47 percent stated they had difficulty figuring out how much cloud providers would bill them for container services each month. 

For the majority, these overpayments can grow quickly -- a problem that is particularly pressing for many businesses and their approach to Kubernetes workloads. According to research from the Cloud Native Computing Foundation, 68 percent of Kubernetes users surveyed found charges had grown in the last 12 months. Of those who saw costs rise, half experienced an increase of more than 20 percent.

Businesses are falling victim to the complexity of public cloud service charges, with egress and ingress charges, service costs and other expenses all piling up, making it difficult to keep up to speed with the costs of managing data on public cloud. Civo’s research found that 45 percent of developers faced an unexpected bill from a cloud provider.  

Big cloud, big bills 

Ever growing infrastructure costs can hinder plans for future development. Product launches can prove to be a drain on resources that outweighs their financial return and trust can be lost in a business. Managing expenditure is part of any successful business plan and it is imperative that IT decision makers take on the responsibility to address this issue. 

The tech industry needs to assess why we have allowed dominant public cloud providers to implement such opaque billing methods. These policies particularly threaten smaller enterprises that operate on the tightest of margins, where one sudden unexpected cloud bill could lead to business failure. These hikes in charges would not be accepted for any other business expenditure.  

The need for clarity 

It is not surprising that IT leaders are beginning to challenge dominant public cloud providers and the tactics they employ. Matthew Prince, CEO at Cloudflare, represented the view of many when declaring recently that "AWS’s bandwidth pricing is bonkers".

Prince’s comments encapsulate the particularly cynical nature of AWS billing structure. Consumers are lured into their service by minimal charges from moving data into the cloud (ingress) but fall victim to the extortionate prices for moving data out (egress). The cynicism of this move is only emphasized by the drop in bandwidth costs of 93 percent over the last decade, a drop that we have not seen reflected in any changes to egress charges from AWS. This attitude points to an ingrained failing from all the major hyperscalers to be fair and upfront with developers, instead pursuing widening levels of profit at the customer’s expense. 

Rather than being the guiding principle of our industry, transparency seems to be sorely lacking. Fifteen percent of cloud developers told Civo that opaque pricing when using hyperscale providers was their primary frustration with containers. Indeed, the egress charges that would be incurred from a wholesale data migration are locking many businesses into their current cloud provider, even if it is more costly to stay with them in the long term.

The accessibility of cloud computing is one of its main technological appeals, but this is not translating into a beneficial cloud native world for the industry at large. Hyperscale vendor lock in does not corroborate with the flexible requirements of modern IT infrastructure; technologies like containers rely on portability, seamlessly moving workloads and applications between various cloud and on premise environments.

Some might argue that cloud adoption is being held back by a lack of strategic planning around the technology. That is certainly a problem: Gartner estimates less than one third of firms have a documented cloud strategy. But to enable this shift, we need to see the industry provide more transparency and predictability to costs in the cloud for businesses.

The time for change is now. Too many enterprises are simply using the Big Three services without a clear justification, resulting in overspend and under-utilization of services. Developers must be put first in this cloud-native world. Providers need to provide some much needed clarity for users, offering a clear idea of pricing and chargeable services from the start. Knowing the next monthly bill with certainty will enable businesses to implement cloud technology into their businesses plan for the long term and utilize all the innovations it has to offer. 

Photo Credit: ImageFlow/Shutterstock

Mark Boost is the CEO and co-founder of Civo, the only 'pure play' cloud native service provider. He has founded several other tech start-ups including LCN.com, ServerChoice and Bulletproof Cyber.

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