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Delivering Digital

Measuring Enterprise Cloud Growth and Growing Pains

One in every three dollars spent on the cloud is used on wasted resources

Cloud use continues to grow in volume and complexity as cloud platforms becomes more firmly enmeshed in how organizations carry out IT and core business strategies. A new survey out today shows that cloud is at near complete ubiquity, with 94 percent of organizations using the cloud. Only about 3 percent of businesses in the cloud say they do so solely through the private cloud.

According to the 2019 RightScale State of the Cloud Report, organizations of all sizes are increasing public cloud use by 24 percent this year, with the average number of public and private clouds used in organizations on the rise. The typical organization today now uses an average of five types of cloud platforms and has 79 percent of workloads in the cloud.

Based on a survey of 786 tech professionals from organizations of all sizes, the report showed that one in three organizations are at an ‘advanced’ stage of cloud maturity with heavy use of cloud technologies.

More than half of respondents were from large enterprises, for whom cloud spend keeps snowballing as technology leaders turn to its flexibility and scalability to support the modern app economy and the drive toward digital transformation. Approximately 38 percent of enterprise cloud budgets tip over $2.4M per year, with more than one in ten large organizations spending more than $12M per year on the cloud.

13% of enterprises spend $12M or more per year on cloud costs

Enterprises run about the same ratio of cloud workloads as their smaller peers, with about a third of all enterprise workloads pushed out to the public cloud. As befits large, diverse, and complex organizations, enterprise cloud deployments are all over the map. Approximately 84 percent of enterprises have a multi-cloud strategy, with more than half of those using a hybrid cloud approach with multiple private and public cloud approaches in play.

Even as cloud helps transform IT at both tactical and strategic levels, many enterprises are facing growing pains as they accelerate and diversify adoption of cloud solutions.

As earlier studies have noted, many organizations today grapple with keeping cloud budgets in check. As many as one in five organizations today overspend their anticipated cloud budget by 20 percent or more.

So it’s no surprise that managing cloud spend is on top of the heap of the biggest cloud challenges named by enterprises, with 84 percent of respondents picking this as a top obstacle. That number is up by four percentage points since last year.

The report states that as much as

35% of cloud spend is on wasted resources

, as organizations fail to turn the proverbial lights out when certain workloads aren’t in use—essentially paying for unused compute power.

“Despite an increased focus on cloud cost management, only a minority of companies have begun to implement automated policies to optimize cloud costs, such as shutting down unused workloads or rightsizing instances,” the report notes.  “In addition, very little progress has been made from 2018 to 2019 in increasing the use of automated policies. “

What’s more, organizations are leaving money on the table by not maximizing the perks offered by their cloud providers.

“In addition, cloud users are not taking advantage of all the available discounts from cloud providers,” the report explained. “Fewer than half of AWS users leverage Reserved Instances, and only 23 percent of Azure users do so. “

According to the study, about 66 percent of enterprises today have a centralized cloud team, most of which have a primary mission of optimizing cloud costs. Interestingly, these duties usually fall on the shoulders of this centralized cloud team and IT infrastructure and operations personnel, but business units are more likely to own cloud budgets. The report explains that IT finance is also stepping in to take an equal role in chargeback cloud costs, but software asset management and vendor management teams have not caught up in managing cloud spend.

 

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