According to a new study from Vega Cloud, IT leaders are concerned about the economy and actively looking for ways to reduce cloud infrastructure, application and tools costs
Vega Cloud has completed a study on the use of cloud software and services by enterprise IT executives. The study, which included input from 100 vice presidents of IT in companies with at least 1,000 employees, found that macroeconomic conditions are having a non-trivial impact on IT budgets and strategies.
In October 2022, Sid Nag, Vice President Analyst at Gartner, said: “Cloud spending could decrease if overall IT budgets shrink, given that cloud continues to be the largest chunk of IT spend and proportionate budget growth.” Those comments appear prescient now. According to Vega Cloud’s report, 48% of IT executives expect to reduce their IT spending a little or a lot in 2023, and 65% said that reducing their cloud spending would also be a goal for this year. Three-quarters of IT execs said they plan to cut cloud costs by 10-50% in 2023.
While Vega Cloud’s report is far from a death knell for cloud – 100% of executives surveyed by Vega Cloud said that cloud infrastructure, applications and tools were either somewhat or very important to their business, and 91% are spending at least one m************** annually on cloud infrastructure alone – the focus for enterprise IT executives, at least in the short term, appears to be on how they can more carefully manage their cloud use and control related costs.
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Following are the top five IT and cloud optimization trends identified by Vega Cloud in its study:
#1: IT executives are concerned about the effect of the economy on their budget
Fifty-six percent of respondents said they are concerned about the economy, and 95% said those concerns have, at least somewhat, impacted their IT strategy. Sixty-two percent said the biggest way those concerns have manifested is they’re more closely monitoring all IT costs, and 52% said they’re more closely evaluating service providers for more cost-effective options.
#2: IT executives are sometimes surprised by what they find on their cloud bills
Forty-five percent of IT leaders said they received a surprise in their cloud bills “a number of times” over the past 12 months, and 70% said surprises have happened at least a half dozen times in the past year. Over-spend on database costs were the most common surprise followed by surprises on the cost of their bandwidth, storage and compute. Forty percent said they had exceeded a monthly or annual budget multiple times in the past year, and 38% said they had to modify their forecasted cloud spending budget numerous times over the past 12 months.
#3: IT executives are spending considerable time and money monitoring cloud use
Sixty-two percent of executives surveyed by Vega Cloud said they monitor cloud costs very often, and 93% said they have invested at least a fair amount of money on tools to optimize cloud costs. Eighty-two percent of executives said their organizations have invested in FinOps staff or people with FinOps experience. Sixty-five percent said cloud tech skills were the most important characteristic of FinOps staff, and 70% said it was difficult to find these people.
#4: IT executives want to optimize their cloud use and have identified ways to do so
Forty percent of IT executives said the best way to reduce cloud costs is to become more informed about what they’re spending, and 33% said that the best approach is to consistently optimize use of cloud resources. Sixty-one percent said Reserved Instances/Savings Plans are the best way to optimize cloud use, while 55% said waste elimination and 54% said right-sizing.
Fifty-five percent of executives said database costs are the metric that matters most when looking at cloud usage followed by bandwidth costs (51%), storage costs (49%) and compute costs (47%). Sixty-four percent said they look at these metrics at least somewhat often, 46% said they have somewhat optimized their cloud use, and 11% said they’re not optimized at all.
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#5: IT executives think the Big 3 cloud providers and AI could help to reduce cloud spend
Thirty-eight percent of surveyed executives said that among the big three cloud providers, Google is doing the most to help customers manage and reduce cloud costs, followed by Amazon (34%) and Microsoft (28%), and 85% said they could be doing more.
Meanwhile, 88% said they’re using AI at least somewhat to optimize cloud use and costs, and 74% said they think ChatGPT or a similar tool could be used to optimize cloud use/costs further. When asked how AI could help reduce cloud costs, 42% said they thought it could improve decision making, and 30% said it could automate decision making.
“The data uncovered in our survey matches what we’re hearing from our customers,” said Kris Bliesner, CEO of Vega Cloud. “IT leaders are under pressure to reduce costs and the cloud is one area on the chopping block. The key is where to look for savings and how to cut in order to maintain the efficiency, innovation and other benefits that the cloud is well known to offer.”
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