Enterprise cloud management company RightScale Inc. has come up with the alarming forecast that almost $10 billion in cloud spending will be wasted by companies in the next year.

The biggest problem is the enormously complex way in which public cloud providers such as Amazon Web Services Inc. and Microsoft Corp. bill customers for their services, RightScale said. The company added that this complexity persists even as providers like AWS insist they’re making big strides to simplify the way they bill their customers and save them money.

“For example, AWS recently claimed it saved AWS users $500 million by alerting customers when they are overpaying,” said Kim Weins, vice president of cloud cost strategy at RightScale. “Unfortunately, this is just a drop in the bucket. RightScale has seen that companies waste, on average, 35 percent of their cloud spend. This equates to $6.4 billion in annualized wasted cost for AWS alone. For the top three public cloud providers (Amazon Web Services, Microsoft Azure and Google Cloud Platform), this represents annualized waste of $10 billion.”

RightScale pointed out that the way public cloud customers are charged is often mind-boggling, with some of the largest receiving bills that include “millions of line items” representing thousands of different resource types and price points. For example, AWS compute instances alone have more than 70,000 price points, the company said.

That’s not to say that all of this wasted spend is because of pricing complexity. Customers are at fault too, often using compute instances that are much larger (and more expensive) than they actually need to get a particular job done. RightScale’s statistics show this is the case with 40 percent of all cloud compute instances, which could be downsized without any impact on application performance. It added that each one of these oversized instances is wasting between 50 percent and 75 percent of customer’s spend, and accounts for between 11 percent and 16 percent of all wasted cloud spend.

A second problem is that many customers are guilty of leaving their virtual machines up and running even when they’re not in use. RightScale said companies could save a massive 67 percent of their cloud spend by switching off development instances overnight or at the weekend, when they’re not needed.

Other problems include failing to choose the correct region in which to run workloads. Some 13 percent of instances could be switched to a cheaper, nearby region without any impact on performance, according to the company. Many customers also fail to take advantage of discounts offered by cloud providers. One reason for this could be that the discounts themselves are almost as confusing as the price lists.

“Companies find it difficult to choose the best discount options and forego savings that can range from 20-70 percent,” RightScale said. “For example, AWS has more than 60,000 discounting price points just for reserved instances, while Azure recently announced a new reserved instance offering.”

It’s worth noting that RightScale’s findings do serve to benefit the company directly, as it offers services and products that help companies to get a better handle on their cloud spending.

Image: Kalhh/Pixabay