The burden of growing cloud costs

Enterprises are struggling to get their cloud hosting costs under control. We’ll explain what is behind the sudden price hikes, and what the consequences are for you.

The emergence of AI

The pricing strategies of some tech companies are being affected by generative AI, which involves creating new ideas or content using algorithms. According to Sid Nag, vice president analyst at Gartner, it is expected that there will be price increases related to generative AI applications. He mentioned that certain cloud providers estimate that interacting with a generative AI application like ChatGPT could cost about 10 times more than a standard keyword search. These interactions involve a transformer-based query mechanism that utilises natural language processing and sequence transduction.

Salesforce, for example, has announced a price increase of 9% for several of its products that use generative AI, such as Sales Cloud and Service Cloud. This is due to the large number of new features that have been developed, including generative AI innovations, in the last seven years.?

Overprovisioning

The process of setting up infrastructure in the cloud is similar to that in a data center. The application owner or developer defines the necessary hardware and software resources, and a dedicated virtual server, also known as an "instance," is assigned to fulfill those requirements.

To avoid hiccups caused by the limited flexibility of data center infrastructure, developers and application owners often overestimate the necessary resources for a workload. According to Harish Doddala, senior director of product management at Harness Inc., developers prioritise ensuring optimal performance for their applications and tend to err on the side of caution by overprovisioning resources.

Forgotten instances

The second form of overprovisioning occurs when cloud instances continue to run even when they are no longer required. This is not a significant issue in an on-premises environment, but in the cloud, costs continue to accumulate as the clock keeps ticking.

Automated solutions

With Pengu’s plug-in solution, Reserved Instances are tracked in real-time, buying more when needed, and offsetting any excesses. This way, your elastic cloud compute is always at an optimal level. Reach out to us to find out more.?Wij zijn nu in het traject van akkoord krijgen intern