The State of Cloud Cost, a captivating tale,
Unveiling the trends, the wins, and the trail.
The cloud economy is experiencing a remarkable surge, as businesses and individuals increasingly recognize the value and flexibility offered by cloud computing solutions. With its ability to provide scalable resources, enhanced collaboration, and cost savings, the cloud market has become a key driver of digital transformation.
As of the present, worldwide end-user spending on public cloud services is forecast to grow 20.7% to total $591.8 billion in 2023, up from $490.3 billion in 2022, according to the latest forecast from Gartner, Inc. This is higher than the 18.8% growth forecast for 2022, a testament to its exponential growth and the widespread adoption of cloud technologies across industries.
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In 2022, GCP (Google Cloud Platform) generated revenue of $25.7 billion, while AWS (Amazon Web Services) and Azure earned $55.4 billion and $39.5 billion, respectively.
However, in 2023, there is a projected increase in revenue for all three cloud computing giants. GCP's estimated revenue is expected to reach $32.5 billion, indicating significant growth. AWS, already leading the market, is projected to generate $62.7 billion in revenue, maintaining its dominance. Azure is also anticipated to experience growth, with an estimated revenue of $44.6 billion.
These figures suggest that all three platforms are experiencing steady expansion in their respective markets, reflecting the increasing demand for cloud-based services and highlighting the intense competition among these industry leaders.
AWS is the clear leader in the cloud computing market, with a market share of over 33% in 2022. Azure is second, with a market share of over 22%, and GCP is third, with a market share of over 10%.
Among the top customers, GCP counts Spotify, Twitter, and Target; AWS boasts Netflix, Airbnb, and NASA; and Azure attracts the likes of Intel, Adobe, and Verizon, exemplifying the broad spectrum of organizations harnessing these leading cloud services for their technological needs.
*Source: GlobeNewswire
In 2022, the cloud cost management landscape witnessed a remarkable surge as cloud providers such as AWS, GCP, and Azure introduced an impressive array of new services. Simultaneously, a wave of innovative startups emerged to cater to the growing demand in this space. A staggering total of 45 new services were unveiled by the leading cloud providers, while 78 startups entered the market, offering cutting-edge solutions for cloud cost management.
Looking ahead to 2023, the momentum shows no signs of slowing down. Experts predict that the number of new services directly from cloud providers will increase by 20%, reaching a remarkable 54 offerings. Additionally, the startup ecosystem is set to expand further, with an estimated 100 new companies venturing into the cloud cost management sector.
Among the notable services and startups that has emerged till now are as follows:
The cloud cost management sector has experienced an astonishing surge in venture capital (VC) investments, propelling it to new heights of innovation and growth.
According to Crunchbase, the following is the amount of VC funding that has gone into the cloud cost management space from 2020 to 2023 (predicted):
*Source: Crunchbase & CBINSIGHTS
With a recent survey of major industries and organizations, it was discovered that the demand for FinOps professionals has multiplied by a staggering 300% in the last two years alone. This surge in demand signifies the increasing recognition of the crucial role played by FinOps in optimizing financial operations.
Today, there are countless FinOps positions available across various sectors, ranging from startups to multinational corporations. The numbers speak volumes: job boards feature an impressive average of 500 new FinOps job postings each month, a significant increase from the mere handful just a few years ago.
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*Source: FinOps Foundation
With over half of all workloads and data now residing in the public cloud and 65% of companies reporting heavy usage, the cloud's prominence continues to grow. In this landscape, organizations face new challenges and priorities. Managing cloud spend takes the lead as the top concern for 82% of respondents, surpassing security at 79%. Moreover, nearly a quarter of respondents spend over $12 million per year on public cloud services, and 18% report exceeding their original budget.
This captivating shift in focus from security to cost management sets the stage for exploring other emerging trends and innovations in cloud computing.
Cost management trumps security
Managing cloud spend has become the primary challenge for cloud decision-makers, with 82% of respondents indicating it as their top concern, edging out security at 79%. Organizations are becoming more comfortable with cloud security but need to address the increasing expenses associated with their reliance on cloud services.
Growing reliance on cloud
Cloud adoption continues to increase, with more than half of all workloads and data now in the public cloud. Approximately 65% of respondents report heavy usage of public cloud, and the majority (86%) utilize multicloud or hybrid cloud environments.
Multicloud implementation
Among organizations using multiple clouds, the top implementations are siloed applications on different clouds (44%) and disaster recovery or failover between clouds (42%). Security tools (30%) and cost optimization (finops) tools (29%) are the most-used multicloud tools, particularly among enterprises.
Increasing cloud spending
Cloud spending is anticipated to grow, with approximately 30% of respondents expecting an increase in cloud spend over the next 12 months. Approximately 24% of respondents already spend over $12 million per year on public cloud services, and 18% report that their current cloud spend exceeds their original budget.
Market leaders
Amazon Web Services (AWS) and Microsoft Azure continue to lead as the top cloud providers, with AWS having a slight edge over Azure. Google Cloud Platform and Oracle Cloud Infrastructure are tied for the expected growth in terms of experimentation or planned usage.
Cloud cost optimization challenges
While self-estimated wasted cloud spend has decreased slightly, optimizing costs and minimizing waste remains a challenge. Key migration challenges include understanding application dependencies, assessing technical feasibility, and right-sizing or selecting the best instance.
Growing importance of finops teams
Finops, the practice of cloud cost management, is becoming a priority for organizations. Around 72% of respondents have a dedicated finops team, and an additional 14% are planning to establish one in the next twelve months. Responsibilities for cloud cost management are shifting from vendor management and finance teams to finops teams.
Areas for improved cost optimization
Many organizations are not fully utilizing provider discounts, with approximately two-thirds of respondents not taking advantage of available discounts. Implementing unit economics models for cloud cost analysis is gaining traction, with 39% of organizations having already implemented it, indicating potential growth in this area.
*Source: InfoWorld Article
This carefully curated collection highlights renowned events like AWS Re:invent, KubeCon, GCP Next, FinOps X, and VMware Explore, where industry experts, thought leaders, and cloud enthusiasts converge to share cutting-edge insights, best practices, and innovative solutions.
Join these conferences to stay at the forefront of cloud technology, gain invaluable knowledge, network with industry peers, and unlock the secrets to mastering the cloud for optimal cost efficiency and management success.
* Please note that these dates & locations are subject to change. For the most up-to-date information, please visit the websites of the respective conferences.
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