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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.

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.

 

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