The State of Cloud Costs 2024
July 10, 2024
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Containers are a common theme of wasted spend among organizations, according to the State of Cloud Costs 2024 report from Datadog.

In fact, 83% of container costs were associated with idle resources. About 54% of this wasted spend was on cluster idle, which is the cost of overprovisioning cluster infrastructure, while 29% was associated with workload idle, which comes from resource requests that are larger than their workloads require. This wasted spend comes as organizations allocate more of their EC2 compute to running containers, up to 35% compared to 30% a year ago.

Other report findings include:

GPU Spend Increasing

The report found organizations that use graphics processing unit (GPU) instances have increased their average spending on those instances by 40% in the last year. This growth in spend on GPU instances comes as more companies are experimenting with AI and large language models (LLMs). GPUs' capacity for parallel processing makes them critical for training LLMs and executing other AI workloads, where they can be more than 200% faster than CPUs.

"Today, the most widely used type of GPU-based instance is also the least expensive. This suggests that many customers are still in the experimentation phase with AI and applying the GPU instance to their early efforts in adaptive AI, machine learning inference and small-scale training," said Yrieix Garnier, VP of Product at Datadog. "We expect that as organizations expand their AI activities and move them into production, they will be spending a larger proportion of their cloud compute budget as they use more expensive types of GPU-based instances."

Outdated Technologies Are Widely Used

AWS's current infrastructure offerings commonly both outperform their previous-generation versions and cost less, but 83% of organizations still spend an average of 17% of their EC2 budgets on previous-generation technologies.

Cross-AZ traffic makes up half of data transfer costs

The report states that, "On average, organizations spend almost as much on sending data from one availability zone (AZ) to another as they do on all other types of data transfer combined — including VPNs, gateways, ingress, and egress."

The report found that 98% of organizations are affected by cross-AZ charges, representing an opportunity to optimize cloud costs, such as by colocating related resources within a single AZ whenever availability requirements allow.

"In some cases, cloud providers have stopped charging for certain types of data transfer. It's difficult to predict how these changes might evolve, but if providers relax data transfer costs further, future cross-AZ traffic may become less of a factor in cloud cost efficiency," the report adds.

Fewer Organizations Taking Advantage of Discounts

Cloud service providers offer commitment-based discounts on many of their services — for example, AWS has discount programs for Amazon EC2, Amazon RDS, Amazon SageMaker and others — but only 67% of organizations are participating in these discounts, down from 72% last year.

Green Technology on the Rise

On average, organizations that use Arm-based instances spend 18% of their EC2 compute budget on them — twice as much as they did a year ago. Instance types based on the Arm processor use up to 60% less energy than similar EC2s and often provide better performance at a lower cost.

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