The cloud bill comes due — even in a pandemic

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The coronavirus presents a cloud cost puzzle: usage goes up, but costs need to come down. It’s up to companies to work with providers to explore their cost-saving options.

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Cloud bill

Cloud bill- The coronavirus pandemic has bulldozed previously-established spending intentions — the message from CFOs is to cut costs. Technology savings require a nip here, a tuck there, reducing usage where possible.

With revenues down and timeline for a return to normalcy hazy, companies are concerned about cash flow. But bills will still come due from cloud service providers.

The cloud revamped the balance sheet, shifting technology acquisition from a capital to operational expenditure. If a company uses more storage, it would see an increase in its monthly bill.

The inverse is also true: Less usage equates to a smaller bill.

Cloud computing resources aren’t an easy cost to turn off. Companies rely on the technology to maintain operations. More than 20% of enterprises spend upwards of $1 million each month on the cloud, according to the Flexera 2020 State of Cloud Report, released Tuesday. In the next 12 months, companies expect to grow cloud spend 47% on average.

Companies are 23% over budget on average, according to Flexera, which surveyed 750 cloud decision-makers and users. Respondents estimate they’re wasting 30% of cloud spend.

Data from Flexera 2020 State of the Cloud Report

Naomi Eide / CIO Dive

Companies want to better manage their cloud spend and that’s become more important with pressure from COVID-19. But usage is going up in response to the outbreak: 57% of almost 200 respondents to Flexera’s question expect higher than planned usage.

“Cloud [infrastructure as a service] is the exception to the rule in the IT spend world in that, in this recessionary environment, we expect that all IT spend categories are either going to stay flat or decrease for the rest of the year,” Hyoun Park, CEO and principal analyst of Amalgam Insights, told CIO Dive.

“For cloud, there’s no way to cheat,” he said. Companies require more computing because they’re not relying on on-prem resources and need to support remote employees.

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Article Credit: CIO DIVE

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