Rising cloud costs are giving CIOs headaches. In one recent study, 37 percent of respondents said their cloud costs had increased more than 25 percent over the past year. In addition, 37 percent felt that the cloud has failed to live up to its promise in terms of cost-effectiveness.
Many organizations are responding to these cost increases by repatriating their cloud workloads. A 2024 IDC report found that 80 percent of organizations planned to bring some workloads back on-premises in the next 12 months. Repatriation plans had accelerated over the past year.
As with many trends, AI is a driving force. Many organizations placed AI workloads in the cloud for early experimentation and proofs of concept because it allowed them to spin up infrastructure quickly with nominal upfront costs. The cloud also provides access to specialized hardware and prebuilt tools and services to help IT teams to get up to speed. As their AI usage increases, however, many organizations are seeing costs escalate.
While repatriating workloads often makes sense, there are other strategies for managing cloud costs. Coming full circle, there are also AI-powered tools that can be used to help optimize costs and enhance performance.
AI workloads can increase cloud costs significantly due to the need for powerful computing resources, specialized hardware and high storage capacity. Additionally, the iterative and experimental nature of AI development, involving frequent retraining and re-evaluation, can lead to increased costs if not managed effectively.
However, AI isn’t the only culprit. Many organizations were struggling with rising cloud costs before AI came on the scene. Overprovisioning is a common problem. IT teams frequently “buffer” cloud resources to ensure adequate capacity during peak demand, leading to idle resources that add to costs without improving performance.
Underutilization is another common problem, as well as idled or orphaned resources and workloads that don’t use the cloud architecture efficiently. Sudden spikes in traffic or demand can also lead to unexpected cost increases.
The major cloud providers have complex pricing structures, and hidden costs can bust the cloud budget. Charges for moving data out of the cloud provider’s network or between cloud regions add up, especially for large datasets or frequent transfers. According to Gartner, egress fees can account for up to 15 percent or more of cloud costs. Charges for software licenses, marketplace add-ons and third-party services can also increase costs.
Getting a handle on cloud costs starts with monitoring. IT teams should leverage tools that track expenses in real time to identify inefficiencies. The major cloud providers also provide cost-management tools that can determine the source of escalating expenses.
AI-powered tools can analyze historical data and predict future resource usage. They can also detect unusual usage patterns, such as unexpected spikes in traffic, and scale resources dynamically according to demand.
Armed with a better understanding of cloud cost drivers, IT teams can begin taking steps to rein the cloud budget. Reserved instances and spot instances can minimize the costs of predictable workloads, while serverless options can eliminate idle resource costs for workloads that don’t require continuous availability. Rearchitecting applications to best take advantage of the cloud can lower costs dramatically.
AI-powered tools can recommend techniques such as changing configurations, utilizing different storage tiers or resizing virtual machines based on usage. Some tools can even recommend pricing models.
Technologent has a team of experienced cloud experts who can help you monitor and analyze your workloads to find ways to optimize costs. We’ll look for overprovisioning and underutilized and orphaned resources, and help you take advantage of reserved instances and other cost-saving options. We’ll also ensure that you’re using the right storage tiers for your data and look for ways to reduce data egress fees.
Our team will assess all your applications and ensure that each workload is running in the right environment based on cost and other factors. If repatriation is the best option, we can help you plan and execute the move. Give us a call to discuss your challenges so we can help relieve those cloud cost headaches.