The rise of the public cloud providers has been a story of massive growth, but is that now coming to an end?
Both Microsoft and Amazon reported slowing cloud growth in earnings calls last year. Azure revenues grew by 35%, which was lower than the company’s original prediction for the quarter by 1%. Microsoft CFO Amy Hood said that Azure will again slow down this quarter, and predicted a 5% decline in growth. CEO Satya Nadella said in October that the company was now focusing on improving customer loyalty. “In this environment, we’re focused on helping our customers do more with less, while investing in secular growth areas and managing our cost structure in a disciplined way,” he said.
AWS, meanwhile, reported $20.54 billion in sales in its Q4 quarter, but CFO Brian Olsavsksy said it was also seeing signs of a slowdown. The company had a growth rate of 28% for the quarter, but this had declined to the ‘mid-20% growth rate’ towards the end of the period.
He also said it has seen more customers focus on controlling costs, looking to save money. Some of these customers are looking to prune their cloud estate, which had expanded during the pandemic. Olsavsksy said AWS was standing ready to help them. He suggested managing their workloads more efficiently, switching to cheaper products, or using its home-grown Graviton chips with their higher cost/performance ratios.
But with all this adoption, it’s seems customers are still getting their heads around cloud cost optimisation. According to a 2022 survey run by CAST AI, a Kubernetes automation platform, 13% of respondents said they were letting their cloud budgets overrun, and that about a third of total cloud spend gets wasted. The main reasons for all this waste is the lack of visibility into cloud usage and costs, overprovisioning, and leaving cloud resources idle.
Unpleasant surprise
Ian Jansen van Rensburg, lead technologist at VMware SSA, says many companies he comes across think they can run their businesses completely in the cloud, ‘and they don’t have to worry about anything, except when their bill arrives at the end of the month’.
Many enterprises are focussed on getting rid of their private datacentres, he adds, but they’ll probably run into problems.
“It’s not possible (to leave the datacentre) because they’ve got a lot of legacy applications still running in their environment. You can’t just move these into the cloud because they’re not compatible and won’t run. Just to move things to the cloud from your private datacentre is complex. Even if it will run in the cloud, it’s not as easy as just clicking ‘next, next, next’ and, all of a sudden, you’re in the cloud.
“I believe they need a type of solution that can enable multicloud access on a single console and not have multiple skills and tracking, monitoring, policies and costing across individual clouds. Instead, they need cost management and policies and operations seamlessly across all the cloud vendors.”
Jansen van Rensburg says there are definitely challenges around cost, and provides the example of a house with its host of appliances that draw electricity. “You use those appliances for different reasons. You might like your coffee, so you have a machine, and you’ll need to get your clothes washed, or you’ll need lights. Do you put a cost management system in place to track every appliance usage, he asks, conceding that there may be a tiny percentage of people who actually do this.
The developer is like the cook; they make the food, but they’re not going to clean up afterwards.
Ian Jansen Van Rensburg, VMware
“You start consuming cloud services, whether it’s compute or Software-as-a-Service or database, load-balancing or backup, because that’s what you need. As the application grows and becomes more complex and more users start making use of it, you want redundancy, so you put in redundancy services, and then you add security. As those services add up, the costs start adding up, and you’re not necessarily tracking them all.
“You get a massive bill, and then you start tracking the costs and using the cloud costs calculators, but it’s too late. You now can’t switch off things. If there are a lot of customers hitting your application, you need the load-balancers and back-up, the database services and security. You now can’t do without security because you want to save on cost.”
Cost management
Why are companies still struggling with the cloud costs?
Jansen van Rensburg thinks this is probably because they don’t have the correct cost management and automation in place.
“A lot of companies haven’t implemented solutions that will automatically turn off specific workloads if they’re not being utilised. There is intelligent software that can do that, but it also costs money. Developers are under pressure to deliver applications on demand from the business. They spin up environments on the internet. They do that, and then they want user testing to be done, so they leave those environments running. The testing will then be completed, but the developer has now moved onto a new project and the first project is still up and running. And no one’s paying attention to project one.”
He says it’s not always the developer’s responsibility to switch off those environments, but, rather, that of the cloud administrator.
“The developer is like the cook; they make the food, but they’re not going to clean up afterwards. You shouldn’t have anything running in the cloud that you’re not utilising; that’s money for jam. They’re just taking your money.”
So what’s a company to do? Much will depend on the size of the company, and how it’s set up its stack, applications, and operations. On the one hand, running your own datacentre is costly, but, as Jansen van Rensburg says, if you compare private datacentre costs versus that of cloud, cloud will still be more expensive. Then again, you probably won’t have much downtime in the cloud, and you won’t need to spend opex on people and equipment.
“If you’re a small company and you can still afford it, I’d say cloud is still the best route to go.”
* This feature was first published in the February edition of ITWeb's Brainstorm magazine.
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