With cloud costs spiraling, what's a business to do?

Dive Brief:

Organizational public cloud spend is expected to increase 24% this year, but cost optimization and governance continue to present the great challenges to companies, according to the RightScale 2019 State of the Cloud Report from Flexera.
Businesses are prioritizing moving additional workloads to the cloud, expanding container use and implementing a cloud-first strategy, according to the report. But each of these initiatives can accumulate more costs. Recent surveys indicate that container adoption could be driving up costs because a lack of visibility impedes the effective provisioning of cloud resources for the technology, according to ZDNet.
Climbing cloud costs are still surprising many organizations. High-profile customers of Amazon Web Services, including Adobe, Infor, Intuit, Pinterest and Capital One, saw their cloud bills significantly increase year-over-year in 2019, according to a report by The Information. Pinterest's cloud spend was $20 million more than the $170 million expected, and Capital One's spend increased more than $100 million compared to 2017.

Half of enterprises and 20% of SMBs spend $1.2 million or more annually on cloud.

RightScale

Dive Insight:

As businesses move more workloads to the cloud, some increase in cloud spend is natural. The cloud is fundamental to the next wave of enterprise computing capabilities, undergirding many advanced capabilities such as analytics and artificial intelligence.

But it is also sending many companies' bills above what is expected. Confusion persists among buyers who struggle to understand the complex interplay of factors that affect computing costs.

With the average organization using five clouds, according to the RightScale and Flexera report, finding ways to manage cloud spend and governance is critical.

Many companies have or are planning cloud "centers of excellence," or central cloud teams, to manage governance and cost optimization. Cloud and infrastructure and operations teams are largely responsible for managing cloud spend, according to the report, though their understanding of IT's role in managing cloud can differ from business teams.

Organizations could do more to optimize cloud spend, with an estimated 27% to 35% of spend currently wasted, according to the report. Fully leveraging discounts from providers, implementing more automated policies, and improving understanding of software licensing could help organizations be more efficient.