Public Cloud Waste at 28%: Time to Consider On-Demand Private Cloud as an Alternative?

Public Cloud Waste Statistics

The 2023 State of Cloud report by Flexera includes a statistic about annual public cloud waste being at 28%. According to that same report, almost a quarter of respondents (24%) currently spend more than $12 million annually on the public cloud.

If we look at just the top 3 for each organization type:

Among enterprises:

• 34% are spending between $1.2M to $6M
• 29% are spending more than $12M
• 15% are spending between $6M to $12M

Among SMBs:

• 39% are spending up to $600K
• 30% are spending between $600K to $1.2M
• 11% are spending between $1.2M to $2.4M

Extrapolating the average annual public cloud waste spend based on the possible maximum spend for just these organizations, cloud waste amounts to ~$7.2M for each Enterprise and ~$1M for each SMB.

The overall public cloud waste is down from last year (36%), but the numbers are still staggering and should prompt organizations to reevaluate their cloud optimization strategies and consider alternatives, such as on-demand private cloud solutions. Today when organizations are being forced to lay off their workforce, this amount of cloud waste needs closer scrutiny as it may be an opportunity to survive and even thrive in the stormy macroeconomic environment.

In the light of the above information, this article presents the known benefits of private cloud, the factors that make organizations hesitant about the move, on-demand private cloud as the true alternative to public cloud, and also three business use cases that could reduce cloud spend while moving from a public cloud to an OpenMetal On-Demand Private Cloud.

The Argument for Private Cloud Over Public Cloud

The debate between private and public cloud solutions has been a longstanding one in the IT industry. In this section of the article, we will discuss the key advantages of choosing private cloud over public cloud, highlighting cost savings, operational efficiency, improved security, compliance, and higher control and customization.

Cost savings and operational efficiency 

At its core, most private cloud solutions can be cheaper than public clouds primarily because organizations have direct access to the private cloud hardware. This access gives IT teams better control over the efficient usage of resources, leading to reduced waste, naturally improving cost management. This benefit applies to both on-prem infrastructure and hosted private cloud providers.

Additionally, hosted private cloud providers often have transparent and predictable pricing models instead of complicated and fluctuating public cloud billing models. This pricing model allows IT leaders to plan and manage their infrastructure budgets more efficiently.

Improved security and compliance

Both public and private clouds come with various security features. However, private cloud solutions are considered more secure due to the higher levels of control and customization, which includes among other things:

• Dedicated infrastructure
• The ability to implement customized security measures
• Greater control over data
• The ability to isolate networks
• Easier compliance with industry-specific regulations

All of these features make private clouds typically less vulnerable to data breaches than public clouds. New stricter standards around data also make private clouds more attractive to organizations with sensitive data requirements.

Higher control and customization

Private clouds offer organizations more control over their infrastructure. This allows IT teams to tailor their cloud environments to meet specific business needs. This tailoring is achieved in various ways including:

• The ability to choose the hardware, compute, storage, networking components, and the best combination thereof to run their cloud most effectively.
• Full control over the software stack from the operating system, to the middleware, to the application layer. 
• The ability to use applicable open source versions of the software stack as compared to being restricted to the proprietary systems on the public cloud. This has the added benefit of enabling organizations to avoid vendor lock-in while saving on licensing fees.
• The ability to implement tailored security measures that create a robust security framework to address their unique security risks and compliance requirements.

By leveraging these advantages, companies can tailor their cloud infrastructure to meet specific business needs, improve resource utilization, and establish a foundation for innovation and growth.

Hesitancy to Move to Traditional Private Cloud

Despite the acknowledged advantages of private cloud, such as the considerable potential to decrease cloud waste and overall expenses, numerous organizations remain hesitant to embrace it. This reluctance can be attributed to a few prominent factors.

Lack of awareness about alternative private cloud options 

Most organizations are still only familiar with the traditional on-prem private cloud solutions. This required significant CAPEX and dedicated technical teams to help build and manage. Even hosted private cloud solutions took weeks and sometimes months to deploy.

Alternative clouds have now hit the market, challenging the concept of traditional private clouds by delivering clouds that behave just like public clouds while having all of the inherent benefits of a private cloud. Many industry experts are referring to one such alternative category of cloud as an “on-demand private cloud.”

Traditional “lift and shift” or “land and expand” mentality

Cloud migrations strategies broadly fall under the following two categories:

• “Lift and Shift,” where applications and data are transferred from one cloud environment to another with minimal changes. This approach involves taking the application as it is and transferring it to the new cloud environment without modifying it to take advantage of the new cloud platform’s features.
• “Land and Expand,” where the application and its core framework are re-built, re-configured, and re-architected to take advantage of the new cloud platform. 

Organizations sometimes take one of these migration approaches depending on the complexity of the use case and the capabilities of the targeted cloud platform.

However, adopting a more adaptable cloud migration strategy offers a range of advantages, as it enables organizations to tailor their approach according to the unique needs of their applications and infrastructures. This strategy can be viewed as a “hybrid” model, integrating elements from both “Lift and Shift” and “Land and Expand” methods.

By capitalizing on the strengths of each technique, organizations can facilitate a more seamless migration experience and enhance their cloud infrastructure over time.