Companies 'wasting thousands' on cloud services they don't need

By Graeme Burton
16 Oct 2012 View Comments
money-down-drain

Companies are wasting tens of thousands of pounds – sometimes hundreds of thousands – on purchasing cloud services they either don't need or don't even know they are purchasing.

Further reading

Sharon Wagner, founder and CEO of Cloudyn, has just completed a study of cloud spending and usage and found that companies are under-using the cloud capacity that they have paid for.

Speaking at the GigaOM StructureEurope conference in Amsterdam today, Wagner said: "The cloud is significantly under-utilised. That means that around 20 per cent of the individual instances that are running are utilised to the level that they should be. The rest are completely under-performing. One out of five volumes connected to running virtual instances are actually disconnected. So, 20 per cent of the storage is un-used and you can just remove it," said Wagner.

Nevertheless, added Wagner, customers have become more willing this year to make a long-term commitment to cloud and their cloud service providers of choice.

In some cases, said Mat Ellis, founder and CEO of Cloudability, a company that claims to monitor cloud spending, companies are buying services that they don't need to buy and often don't even know they are buying. Cloudability had two customers that were spending more than $350,000 on services that they did not need, he claimed.

"The first customer was using an order scaling service and the order scaler was turning instances on, but failing to turn them off. So they got an error message from Amazon telling them that their number of instances had been exceeded and they thought that they had hit some kind of internal limit," said Ellis.

He added: "Rather than call Amazon up and ask them to raise the limit, they just ordered a new account and put it on the company credit card. They did this through the month – $10,000 or $12,000 at a time – until the bill came in."

The other provider was load testing a very well-known product overnight during last summer, but failed to account for when it completed the task at 2am, and to make sure it turned off. They only found out when they analysed how they were spending the money. "These are the kind of mistakes that happen with every new technology," said Ellis.

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