State of the Cloud Report, Cloud Waste, FinOps and Multi-Cloud |🎙️#45
Cloud Cost Management has kind of taken over as the top concern for organizations. Pablo, Leo and Kirill come together to analyze the numbers from the Flexera State of the Cloud Report in episode 45 of DevOps Accents.
- 27% of Cloud waste, is that a lot?
- What is FinOps and what is its role?
- What are the reasons for the overspent increase?
- Are multi-cloud organizations on the rise?
- Disaster recovery.
You can listen to episode 45 of DevOps Accents on Spotify, or right now:
27% of Cloud Waste: Is That a Lot?
In the latest findings from Flexera's State of the Cloud report, a significant 27% of cloud spending is identified as waste. This refers to cloud resources that remain unused or forgotten, leading to unnecessary expenses. Leo expressed his surprise at this figure, calling it a "big number," even though it’s an improvement from last year. Kirill, however, argued that this figure might actually be on the lower side: “I would expect it to be even more,” he said, noting that many companies simply don't realize how much they are overspending.
Pablo elaborated on this issue by pointing out that too many people within organizations have access to cloud resources, often leading to uncontrolled spending on experiments and projects. He highlighted that a significant portion of cloud costs—around 17% on Google Cloud—is often tied to such experimental work. As he put it, "many times people in companies spend and spend and never check the amount of money" unless someone in the company steps in to monitor the costs. These unchecked expenses contribute heavily to cloud waste and highlight a need for better oversight.
Many companies just do not realize that they waste much more money on the cloud than they should, because almost every company has the potential to optimize their cloud spend. Either because they are just, yeah, they just forgot to turn off or delete some resources. There are many cases where, in the case of Amazon, for example, lots of storage just lies around uncleaned because people forget that every gigabyte of storage costs money, or because their companies use incorrect services that do not really match their requirements and just overspend on those. — Kirill Shirinkin
Cloud infrastructure costs can quickly spiral out of control, leaving you with unexpected expenses. That’s why we’re offering a Free Cloud Cost Audit — to help companies uncover hidden inefficiencies and optimize their cloud spending. Our goal is simple: empower you with actionable insights so you can take control of your cloud budget.
Learn more about the audit and how we can help here, or fill in the application for right away:
What is FinOps and What is Its Role?
FinOps, short for Financial Operations, is a growing discipline that aims to manage cloud costs effectively across different stakeholders in a company. As Leo pointed out, the Flexera report shows that more than half of organizations surveyed have now set up dedicated FinOps teams, and another 20% plan to implement one within the next year. This reflects the growing importance of structured cloud cost management.
Kirill provided deeper insights into what FinOps truly involves. He emphasized that FinOps is not just a team—it’s a framework that includes finance, IT, and engineering working together to make cost-effective decisions. “It’s about making sure every engineer is cost-aware,” he explained. Whether it's tracking cloud budgets or ensuring developers understand how their actions impact cloud spending, FinOps aims to align financial responsibility with technical decision-making. As Kirill noted, this is not about stifling innovation but ensuring that cloud costs are managed in a way that doesn’t undermine a company’s bottom line.
Pablo also touched on the cultural shift needed for FinOps to succeed. Many companies start with small cloud teams and expand rapidly without properly managing their infrastructure costs. Over time, this creates inefficiencies that can only be addressed through a structured, company-wide approach to financial operations.
Why Has Cloud Overspend Increased?
The rising cloud costs can be attributed to several factors. As more organizations embrace cloud solutions, they often lack the internal processes to monitor and control spending effectively. Leo noted that public cloud spending is going over budget by an average of 15%, with overspending becoming more of a norm than an exception. Pablo added that this is often due to the freedom people have to "experiment" within the cloud, spinning up resources and then forgetting to turn them off.
Kirill highlighted another key factor: the use of free cloud credits. Many companies, especially startups, receive generous amounts of free credits from providers like AWS and Azure. However, these credits often obscure the real costs of running infrastructure in the cloud. Once the credits run out, companies are hit with unexpected bills that reveal how much they’ve overspent. As Kirill put it, companies tend to think, "in two years, when we run out of free credits, we’ll be a unicorn company, so we won’t care." This mindset can lead to ballooning cloud costs down the line.
One point before we go to this multicloud organization: one thing with cloud cost is to understand that AWS, Azure, or whatever—these companies, at the end of the day, are businesses that want to make money. It's like an alcohol company. I sell you alcohol, but I make it part of your advertisement, telling you not to drink too much because it's bad for you. But I am the one who is selling alcohol. At the end, it's the same. For example, AWS had a 37% operation margin in 2023, you know, $90 billion. So, it's a company that is telling you, 'Don't spend,' giving you tools to not spend, but at the same time, it's giving you a lot of hints, news, and themes to try, encouraging you to spend money there. It's just that this is the game of this company; at the end, the company is telling you, 'Don't spend money here,' but in reality, it’s like, 'Okay, please spend money because I need to make more money.’ — Pablo Inigo Sanchez
Are Multi-Cloud Organizations on the Rise?
Yes, multi-cloud strategies are becoming increasingly popular. According to the Flexera report, 89% of organizations now use multi-cloud environments, a significant increase from last year. Leo was surprised by how widespread this trend has become, noting that multi-cloud is no longer a niche approach but a standard practice for many businesses.
Pablo, however, offered a nuanced take. He mentioned that while multi-cloud strategies are on the rise, they are not necessarily as interconnected as people might think. “What I see,” Pablo explained, “is that companies use different clouds for different applications.” For instance, one company might use AWS for its primary workloads and Google Cloud for machine learning tasks, but these workloads are often separate rather than integrated.
Kirill agreed, explaining that while most large companies use multiple cloud providers, they don’t typically run the same application across different clouds. Instead, they might use AWS for general infrastructure but turn to Google Cloud for AI and machine learning tasks, or Azure for identity management. In most cases, the multi-cloud strategy is driven by the need to leverage the best tools each provider offers rather than ensuring redundancy.
Disaster Recovery in a Multi-Cloud World
One potential use case for multi-cloud environments is disaster recovery. Leo speculated that companies might use multiple cloud providers to ensure business continuity in case one provider suffers a failure. However, both Kirill and Pablo highlighted the complexity of implementing such a strategy.
Pablo pointed out that true disaster recovery across multiple cloud providers is "complicated" and often unnecessary. He explained that companies would need to establish direct connections between the data centers of different cloud providers, which is both difficult and expensive. Most companies opt for simpler disaster recovery plans within the same cloud provider, taking advantage of the multiple regions and availability zones they offer. For instance, AWS has data centers across Europe, making it possible to set up disaster recovery within the same provider without the need for multi-cloud redundancy.
Kirill added that, while it’s technically possible to create a disaster recovery strategy using multiple cloud providers, it’s usually overkill for most companies. He stressed that many businesses are more concerned with having a solid plan on paper, especially for compliance purposes, than actually implementing a complex multi-cloud disaster recovery system.
Show Notes
2024 State of the Cloud Report
Podcast editing: Mila Jones, milajonesproduction@gmail.com