Gartner: $1 Trillion in IT Spending Moving to Cloud. How Much is on Waste? [Infographic]

August 8, 2016

Gartner recently reported that by 2020, the “cloud shift” will affect more than $ 1 trillion in IT spending.

The shift comes from the confluence of IT spending on enterprise software, data center systems, and IT services all moving to the cloud.

With this enormous shift and change of practices comes a financial risk that is very real: your organization may be spending money on services you are not actually using. In other words, wasting money.

How big is the waste problem, exactly?

The 2016 Cloud Market

While Gartner’s $ 1 trillion number refers to the next 5 years, let’s take a step back and look just at the size of the market in 2016, where we can more easily predict spending habits.

The size of the 2016 cloud market, from that same Gartner study, is about $ 734 billion. Of that, $ 203.9 billion is spent on public cloud.

Public cloud spend is spread across a variety of application services, management and security services, and more (BPaaS, SaaS, PaaS, etc.) – all of which have their own sources of waste. In this post, let’s focus on the portion for which wasted spend is easiest to quantify: cloud infrastructure services (IaaS).

Breaking down IaaS Spending

Within the $ 22.4 billion spent on IaaS, about 2/3 of spending is on computer resources (rather than database or storage). From a recent survey we held – bolstered by our daily conversations with cloud users – we learned that about half of these compute resources are used for non-production purposes: that is, development, staging, testing, QA, and other behind-the-scenes work. The majority of servers used for these functions do not need to run 24 hours a day, 7 days a week. In fact, they’re generally only needed for a 40-hour workweek at most (even this assumes maximum efficiency with developers accessing these servers during their entire workdays).

Since most compute infrastructure is sold by the hour, that means that for the other 128 hours of the week, you’re paying for time you’re not using. Ouch.

All You Need to Do is Turn Out the Lights

A huge portion of IT spending could be eliminated simply by “turning out the lights” – that is, by stopping hourly servers when they are not needed, so you only pay for the hours you’re actually using. Luckily, this does not have to be a manual process. You can automatically schedule off times for your servers, to ensure they’re always off when you don’t need them (and to save you time!)

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