Overprovisioning & Always-On Resources Lead to $26.6 Billion in Public Cloud Waste Expected in 2024

Overprovisioning and leaving cloud resources on are two enormous sources of wasted spend.

Wasted spend drags down IT budgets – of particular importance as we enter 2021. The Flexera 2021 State of Tech Spend report found that the biggest change in key IT initiatives from 2020 to 2021 was in cost savings, with the percent of respondents ranking cost savings as a top initiative tripling year-over-year.

It’s important that this is being recognized.

Based on data collected by Gartner, we estimate that wasted spend will exceed $26.6 billion this year.

Where the Wasted Cloud Spend is Coming From

Gartner estimates a total market spend of $304 billion on public cloud services end-user spending in 2021, as broken out in the table below. Their estimate for the proportion of that spent on Infrastructure as a Service (IaaS) is $65.3 billion. While wasted spend can be found in any area of cloud spend, customers tend to see the largest amount in these two areas, as well as finding it easiest to identify.

Idle Resources

Cloud resources can be considered “idle” when they are running while not being used. For example, when development servers are left running overnight and on weekends when they’re not needed. Since compute resources are paid for by the minute or second, that’s a large portion of the week they’re being paid for but not used (and yes, this applies even if you have reservations.)

Our data shows that about 44% of compute spend is on non-production resources. If we estimate that non-production resources are only needed during a 40-hour work week, the other 128 hours (76%), the resources are sitting idle.

Applying that to the Gartner IaaS number, we estimate that up to $14.5 billion will be wasted on idle resources this year.

Overprovisioned Resources

Overprovisioning occurs when a larger resource size is selected than is actually needed. There is a mindset of safety behind this, as of course, no one wants their applications to be under-resourced.

But the overprovisioning occurring is far beyond what is necessary, given the elasticity of the cloud. About 40% of instances are sized at least one size larger than needed for their workloads. The cost can be cut in half by reducing an instance by one size, while downsizing by two sizes saves 75%.

Many of our customers show a large percentage of their resources are oversized, but bringing this to a conservative estimate of 40% of resources oversized by one size, giving us a savings per resource of 50%, we estimate that up to $8.7 billion is wasted due to overprovisioning.

Orphaned Volumes and Snapshots

Another significant source of waste is orphaned volumes and snapshots. These are resources that have been detached from the infrastructure they were created to support, such as a volume detached from an instance or a snapshot with no volume attachment.

Our customers spend approximately 15% of their bills on storage, and we found that about 35% of that spend is on unattached volumes and snapshots. Applying that to the Gartner spending numbers, we estimate that up to $3.4 billion could be wasted this year on orphaned volumes and snapshots.

Reducing Wasted Spend

Altogether, this gives us an estimate of $26.6 billion to be wasted on unused cloud resources in 2024.

This waste estimate is just based on the three prominent sources of cloud waste. It does not include wasted spend on Platform as a Service (PaaS), which makes up $55 billion in cloud spend according to Gartner’s estimates, nor from SaaS, unused reservation commitments, inefficient containerization, and other areas of the bill.

Attacking the three problem areas above is a great area to start for nearly all public cloud users. Here at ParkMyCloud, we’re on a mission to do just that. See how and try it out today, to do your part in reducing wasted cloud spend.

Right-Sizing Instances for Cost Efficiency

Right-sizing instances is one of the most effective ways to reduce cloud costs without compromising performance. Overprovisioning resources is a common practice due to concerns about underperformance, but this often leads to significant financial waste.

Here’s how to address this issue:

• Evaluate Current Utilization: Use cloud monitoring tools to track resource usage over time. Identify underutilized instances where CPU, memory, and storage usage consistently fall below capacity.
• Implement Autoscaling: Use autoscaling to dynamically adjust resources based on actual workload demand. This approach ensures that your applications have the right amount of resources during peak and low usage periods.
• Leverage Cloud Provider Recommendations: Most cloud providers, such as AWS, Azure, and Google Cloud, offer tools to recommend appropriate instance sizes based on historical performance data.
• Conduct Regular Audits: Schedule periodic reviews of instance performance to ensure configurations remain optimal as workloads evolve. Downsizing an instance by just one size can save up to 50% in costs, and further reductions yield even more savings.
• Test Before Committing: Use performance benchmarks to ensure the selected instance size meets application needs before making changes.
• Encourage a Culture of Cost Awareness: Train teams to understand the financial impact of overprovisioning and encourage them to adopt cost-conscious cloud practices.

Addressing Storage Inefficiencies

Unattached volumes and snapshots are silent budget killers in cloud infrastructure. These storage elements are often left behind after resources are terminated, leading to unnecessary costs.

Identify Orphaned Volumes and Snapshots

• Use cloud management tools to scan your storage environment for unattached volumes and snapshots.
• Look for storage resources that have not been accessed or linked to any active instances for a significant period.

Automate Deletion Policies

• Set automated policies to delete unattached volumes and snapshots after a defined retention period.
• For critical snapshots, ensure they are tagged for protection before applying deletion rules.

Optimize Storage Tiers

• Move rarely accessed data to lower-cost storage tiers offered by cloud providers, such as AWS S3 Glacier or Azure Cool Blob Storage.
• Use lifecycle policies to automatically transition data between tiers based on usage.

Monitor and Tag Storage Resources

• Implement tagging policies for all storage resources to easily identify their purpose and associated workloads.
• Regularly audit tagged resources to ensure they are still required and appropriately configured.

Educate Teams

• Train team members to properly clean up resources after they are no longer needed.
• Encourage the use of infrastructure-as-code (IaC) to automate the lifecycle management of storage resources.

Wrapping Up

Reducing wasted cloud spend is essential for optimizing IT budgets, especially as organizations increasingly rely on cloud infrastructure.

Overprovisioned instances, idle resources, and orphaned storage are among the most significant culprits of inefficiency, collectively accounting for billions in unnecessary expenses annually.

By taking proactive measures like right-sizing instances, implementing autoscaling, and addressing storage inefficiencies through automation and regular audits, businesses can dramatically cut costs while maintaining or even improving performance.

These efforts not only enhance cost efficiency but also foster a culture of financial accountability and resource optimization within the organization.

As cloud environments continue to grow in complexity, adopting robust monitoring tools and embracing best practices for cloud management will be crucial for staying competitive. Investing time and effort in identifying and eliminating waste is not just a cost-saving measure – it’s a strategic approach to building a more agile, sustainable, and future-ready cloud infrastructure.