Dive Brief:
- Amazon CEO Andy Jassy underscored the company’s pledge to help AWS customers manage cloud costs in a Thursday letter to shareholders.
- “AWS sales and support teams are spending much of their time helping customers optimize their AWS spend so they can better weather this uncertain economy,” Jassy said in the letter.
- AWS is the dominant player in public cloud infrastructure services. The company owns one-third of the global market, according to Synergy Research Group’s February report. Microsoft and Google trail, with 23% and 11% respectively.
Dive Insight:
Even as companies continue on the path to modernization, undeterred by the economy, optimization has replaced optimism in the enterprise cloud ecosphere.
Global spending on cloud pushed past $61 billion in the final three months of 2022, Synergy Research Group found. But growth in the U.S. market slowed to 27%, down from an average rate of 31% in the previous four quarters, as companies sought to revise IT spending.
“Many of these AWS customers tell us that they’re not cost-cutting as much as cost-optimizing so they can take their resources and apply them to emerging and inventive new customer experiences they’re planning,” Jassy said.
In the rush to modernize, many companies commenced cloud migrations without installing sufficient spending guardrails. But, with revenue growth suppressed by rising interest rates, persistent inflation and broad macroeconomic uncertainty, CIOs were pressed to rationalize spending and clamp down on overruns.
“In the current financial environment, our concern is to help senior executives figure out what they need to do to respond to the economic situation,” Mark Schwartz, AWS enterprise strategist, told CIO Dive in February.
Ideally, companies can build enough resiliency and flexibility into their cloud strategy to avoid building up excess capacity during an economic downturn and ramp back up when growth accelerates, Schwartz said.
As enterprises weigh IT investment options, cloud’s elasticity remains a selling point.
“Many companies use discontinuous periods like this to step back and determine what they strategically want to change,” Jassy said. “We find an increasing number of enterprises opting out of managing their own infrastructure, and preferring to move to AWS to enjoy the agility, innovation, cost-efficiency and security benefits.”
AWS' push to help customers manage costs surfaced during an October earnings call, in remarks by Amazon CFO Brian Olsavsky. The move to optimization was again highlighted by Olsavsky in February. The company will report Q1 2023 earnings next week.
