Reserved Instance usage increased from 13% to 20% year over year

With close to a third of the average organization’s cloud budget going entirely to waste, it’s unsurprising that this line item in business spending is becoming a key area of cost optimization. So much so that reserved instance (RI) usage has increased from 13% to 20% year-over-year.

According to our Senior Insights Manager, Ethan Elstein, this is almost certainly the result of companies looking for opportunities to drive down spend.

Implementing reserved instances isn’t a miracle cure to eliminating cloud wastage, though. It only works if you are effectively utilizing them.

Which is where Vertice’s RIO capabilities come in. By eliminating the burden of manually managing your discount commitments and automatically optimizing your RI coverage, we can help you cut your compute spend by as much as 60%.

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AWS costs are becoming even harder to predict

Standard deviation of AWS costs has increased 8.7% in the last quarter, indicating that the costs associated with using the cloud provider are becoming all the more unpredictable and volatile, which is a major problem for finance leaders.

The inability to accurately forecast any business cost is problematic, but when you consider how cloud spending accounts for as much as 11% of an organization’s total spend, the severity of the issue is all the more apparent.

But why’s it happening and what can be done about it?

AWS cost variations can occur for a number of reasons, such as changing usage patterns, inadequate AWS resource management practices, service utilization, periodic changes to pricing models, and so on.

Being in a position to mitigate these challenges is therefore fundamental.

This is where cloud cost optimization comes into play.

By providing you with full oversight of your AWS usage and spend, you can more accurately attribute your costs and forecast spend. With a platform such as Vertice, you will also be alerted in real-time to any irregularities in your usage that may impact your cost.

See how Vertice identified $1.1 million in AWS savings potential for one customer

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AWS cost leaderboard

Below, we’ve provided a breakdown of the top 10 AWS services by share of spend in the final quarter of 2023, along with a look at how it compares to the previous quarter.

Amazon Elastic Compute Cloud, also referred to as EC2, once again tops the leaderboard, which comes as little surprise, given how compute costs account for the largest share of cloud spend within the average organization.

It’s not the only reason we may have seen an increase in demand during this time, though.
With traffic often increasing significantly during the holiday season, particularly the Black Friday weekend and Christmas period, companies will often scale their EC2 instances during these peak times.

But while the share of spend for this service has seen a noticeable increase between the two quarters, it is actually AWS Support (Enterprise) that has experienced the largest growth, jumping from 2.59% to almost 5%.

Unfortunately, where there are winners, there are losers.

In terms of the AWS services that have seen the biggest decline in share of spending, Amazon Relational Database Service tops the charts with its share of spend falling from 16.32% to 13.8%. One of the likely reasons for this is due to companies increasingly switching to AWS alternatives, such as Aurora.

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Gain control of your cloud spending

The rate at which cloud costs are rising is not only unsustainable for many organizations, but with limited visibility into cloud usage and spend, finance leaders often have no effective way to get these costs under control.

With Vertice, this no longer has to be an issue.

As a Cloud Cost Optimization platform, we will continuously monitor and analyze your cloud infrastructure, using more than 75 optimization tests to generate cost-saving recommendations – all of which either require minimal engineering effort or can be implemented on your behalf.

What’s more, we’ll alert you to anomalous increases in spending, manage your discount commitments and provide you with much-needed visibility and insights to accurately forecast spend.