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Surging cloud costs leave companies rethinking their strategies

Eric Gregory - January 27, 2023

Ruby on Rails creator David Heinemeier Hansson raised eyebrows late last year when he announced via blog post that his company 37Signals was leaving the public cloud. He followed up with some more details this month, and the numbers are eye-opening.

After breaking down a 3 million dollar annual cloud bill, he found that the company was paying about $78,000 a month for compute on AWS, while they could get equivalent hardware for $1,300 a month. Of course, you get more than access to the machine with a cloud service—more on that in a moment— but that’s undoubtedly a pretty big mark-up.

37Signals, of course, isn’t the only company looking at astronomical bills—Heinemeier Hansson goes to pains to indicate that 37Signals’ tab has been expertly optimized, and they were getting rates based on multi-year commitments. So, it’s not a surprise that this month has seen a spate of stories about out-of-control cloud costs.

The Register reported on a general “cloud growth slowdown,” citing an Uptime Institute report that showed quarter-on-quarter AWS revenue growth at 27.5 percent in Q3 2022, an all-time low for AWS. Of course, lots of businesses would love 27.5 percent growth, but this is a notable shift in a space that has grown accustomed to ever-expanding growth. 

According to the Uptime Institute report:

The global macroeconomic environment — specifically, high energy costs together with inflation — is making organizations more cautious about spending money. Cloud development projects are no different from many others and are likely to be postponed or deprioritized due to rising costs, skill shortages and global uncertainty.

Some moves to the cloud may have been indefinitely deferred. Public cloud is not always cheaper than on-premises implementations, and many organizations may have concluded that migration is just not worthwhile in light of other financial pressures.

But before you pack up your cloud bags, columnist Rupert Goodwins sounds a note of nuance:

It's perfectly in order to do as much of the hard stuff yourself as you deem fit, provided you have a clear-eyed view of the competencies, costs and consequences involved. What are the single points of failure, and how do you fail over? How do you test it, and who picks up the pieces? If you're really good at this, wouldn't you be better employed selling those skills rather than being a CTO in charge of yet another B2B on-demand service? If you're not really good at this, should you be taking it on?

And that’s really the rub right there—the choice isn’t between giving AWS a direct line to your bank account and bringing everything in-house. This is the middle space where a lot of organizations need software-defined infrastructure that provides cost-optimal cloud choice, including private cloud, as well as expertise-on-demand for dealing with the hard stuff.

That’s the territory where ZeroOps strategies can make a big difference, whether orgs find themselves moving toward or away from public cloud. Cloud platform operations services can help ensure your clouds are working at peak efficiency, while Mirantis Professional Services' DevOps-as-a-service saves money, helping you assess operating costs and identify wasteful resources, all while accelerating deployment.

A ZeroOps strategy is built on the assumption that your organization should be spending its time doing what you do best—not becoming ops experts. Our own approach balances forward-looking automation with cloud native expertise-on-demand—so you can focus on what matters to you.

Ready to learn more about how you can reduce your cloud costs? Check out our Platform Engineering and DevOps-as-a-Service Solution Brief, or contact us today

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