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Report: AWS Customers Overpay by $6.4 Billion Each Year

Cloud computing users collectively rack up $10 billion per year in unnecessary costs, with the Amazon Web Services (AWS) platform being the biggest money drain.

That's according to cloud resource management firm RightScale, which released data earlier this month based on its customers' cloud spending. The company calculated that roughly 35 percent of an average cloud customer's bill is wasted spend, five percentage points higher than self-reported estimates.

Overspending affects users of all three major cloud platforms: AWS, Microsoft Azure and Google Cloud Platform (GCP). However, because AWS is by far the biggest platform by market share, it's no surprise that it's also the biggest contributor to that waste. Of the $10 billion in annual waste across the three platforms, AWS accounted for $6.4 billion, according to RightScale.

"Cloud providers claim they are getting better at helping companies reduce some of their cloud spending," said Kim Weins, vice president of Cloud Cost Strategy at RightScale, in a prepared statement. Weins was partly referring to AWS CEO Andy Jassy's assertion during October's Gartner Symposium that AWS has saved its customers $500 million in unnecessary costs. Based on RightScale's findings, however, that amount "is just a drop in the bucket," Weins said.

One reason that organizations can easily lose track of their cloud spending is that vendors rarely have easy-to-understand billing or pricing models, according to RightScale. As an example, the company noted that AWS has over 70,000 different price points for its instances alone. In addition, the wide variety of discount plans offered by vendors, while designed to lower costs, often add another layer of complexity.

"AWS offers reserved instances, with more than 90 percent of those instance price points being for different discount options. Azure has just announced reserved instances and (surprise!) they work differently than those on AWS. Google has its own approach to discounting with automatic Sustained Use Discounts as well as Committed Use Discounts," Weins noted.

Not only are their billing models complex, but vendors are constantly announcing price cuts and new services that can wreak instability from one invoice to the next. In just the last two months, for instance, AWS has introduced multiple pricing options (see examples here, here, here and here) as well as new instances that also come with their own price tags (examples here, here, here and here).

RightScale also identified "decentralized" cloud use in organizations as a major source of unnecessary spending. It's easier now for individual employees and non-executive departments to deploy cloud-based services, and often without the need for approval from higher-ups. While this agility may be a boon to company productivity, it also makes it harder to keep a tight rein on costs.

"[T]he teams now doing the provisioning often have little reason to ensure the efficient use of cloud resources," Weins said. "Prices for individual VMs or resources seem small, and it's not until cloud use has grown and cloud spend becomes significant that they become aware of how waste adds up."

RightScale suggested three ways that organizations can minimize their cloud waste:

  • Take advantage of reserved instances.
  • Keep a close eye on instances to make sure they're not over-provisioned or sitting idle. Also, whenever possible, take advantage of lower instance prices at nearby regions.
  • Purge your cloud storage of unused disks or snapshots.

About the Author

Gladys Rama is the senior site producer for Redmondmag.com, RCPmag.com and MCPmag.com.

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