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Cloud costs risk spiralling out of control in 2022 – unless we act now
By Mark Boost, CEO and co-founder of Civo
There has been a huge increase in demand for cloud services over the last 18 months. It allows businesses to run workloads flexibly and at scale with ease. Flexera’s 2021 State of the Cloud Report found that the use of cloud rose partially or significantly for 90% of businesses.
This means that a cloud-native world is approaching, spelling many opportunities for organizations large and small. Technological innovation is top of the agenda for the vast majority of businesses, and cloud is critical on that journey. Cloud can be a fantastic enabler of other technologies, helping companies to scale up in fields such as artificial intelligence and deliver tangible value right across the business.
As organizations look to be more cloud-native proficient, containers are critical. Developers have flocked to containers as a reliable and flexible way to package up software code – ready for deploying, testing, and running the applications relied upon by businesses every day. Containerization is of special importance for developers because of the portability it provides. This in turn allows developers to shift workloads between a number of cloud and on-premise environments.
Kubernetes was a critical part of this rapidly emerging cloud-native world in 2021. Developers flocked to the container orchestration platform to help them optimise and manage the running of containers, supporting businesses as they scaled. Research from Civo in 2021 found that 90% of enterprises using the container orchestration platform Kubernetes are running it in the cloud.
However, this cloud-native world of 2021 is built on unstable ground. Spiralling costs and service charges are out of control. Without action in 2022 to address these problems, we risk the cloud becoming a closed shop for smaller enterprises.
The costs of cloud
Gartner reported that the amount spent on public cloud services by end-users globally in 2021 is expected to increase 23.1% to $332.3 billion, as opposed to 2020’s spend of $270 billion.
But as investment rises in the cloud, so has another troubling phenomena: ‘cloud sprawl’. Businesses are rapidly expanding their cloud capabilities, but in the process leaving many workloads and assets underutilised. Research from Densify suggests firms may be overspending by as much as 42% on cloud.
However, the source of this problem rarely lies with end-users – rather with the billing systems used by cloud providers. In Civo’s recent survey of 1,000 developers, it was found that 47% of respondents had experienced difficulties in finding out the amount their cloud providers would charge them to use containers on a monthly basis.
It should not be underestimated how quickly these overpayments can slip out of control; this is a financial risk, particularly for start-ups and SMEs with tight profit margins made even tighter by the financial challenges of the last year. In a recent survey of the Kubernetes community, the Cloud Native Computing Foundation found that the cost of running Kubernetes has increased within the last year for 68% of respondents. The costs had risen by 20% for half of those particular respondents.
At the core of this stark problem facing our industry is the confusing web of complex and opaque public cloud service charges: egress and ingress charges, service costs and other expenses all quickly accumulate. Together, they make it incredibly difficult for IT teams to keep up with the costs of managing data on the public cloud. Civo’s research uncovered that 45% of developers had experienced unexpected costs from their cloud hosting provider. This status quo is not good enough and cannot continue into 2022. It is time for change.
Predictability is non-negotiable
Looking ahead to 2022, it is clear that the industry needs to change course. We must look to understand why it is just accepted that charges for the cloud can be so hard to predict. This ‘consensus’ in our industry is particularly troubling for SMEs, who rely on predictable expenditure to plan ahead, strategize growth and ultimately keep the business afloat.
It would not be justifiable if taxes were increased haphazardly on a monthly basis; nor would it be acceptable for a marketing vendor to tack on surplus charges at random when a business develops a long-term relationship with them. So why do we accept such behaviour with cloud technology?
Less complexity and more transparency
Going forward, we are likely to see more dissent to the offering provided by hyperscalers such as AWS, Azure, and Google Cloud. Already this year Cloudflare CEO Matthew Prince has begun this pushback, declaring that “AWS’s bandwidth pricing is bonkers“.
Fundamentally, hyperscale providers’ prices do not match the services they offer. For example, the cost of ingress is cheap compared to the cost of egress, which can be extortionate. Prince’s statement hints at the fact that whilst bandwidth costs have dropped by 93% over the last ten years, hyperscale providers such as AWS have not reduced their charges in line. This may be good for their profit margins, but it is certainly not good for their client’s balance books.
Providers who can deliver full transparency on pricing and billing will have a firm advantage in 2022. We only need to look at the bubbling dissatisfaction amongst developers to see time is ripe for change: 15% cloud developers told Civo that opaque pricing when using hyperscale providers was their primary frustration with containers.
It is important that businesses put their developers first, and get rid of the confusing pricing structures. If companies were able to identify how much their next monthly cost for cloud would be, they would more easily be able to take advantage of the exciting opportunities cloud presents to their long-term plans.
It is worth remembering as well, that a truly cloud-native world relies on seamless operations on IT infrastructure spread across cloud and on-premise environments. Too many businesses are left in a state of vendor lock-in, trapped by the extortionate egress charges they would face for a wholesale data migration off the cloud.
Ultimately, the future remains uncertain for cloud technology. Undoubtedly 2021 has been a year of unprecedented innovation in this space, with more businesses than ever before embracing cloud technology. But troubling issues of cost and complexity haunt our industry, and risk slowing progress in 2022 – unless we act now. Far too many firms adopt the services of the Big Three providers without a clear justification as to why. The providers who thrive in 2022 will be those who can offer a different way forward, one built on transparency and clarity on pricing and chargeable services from day one.
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ABOUT THE AUTHOR
Mark Boost is the CEO and co-founder of Civo, the only ‘pure play’ cloud native service provider. He has founded several other tech start-ups including LCN.com, ServerChoice and Bulletproof Cyber.
