AWS now world’s fifth biggest tech firm
AWS revenue reached $17.5 billion in FY2017. While still dwarfed by the likes of Microsoft ($102 million), IBM ($79 billion), Oracle ($39 billion), it is now within striking distance of SAP ($26 billion) and is twice the size of Salesforce ($9.9 billion). While AWS grew a staggering 43% in FY2017, SAP managed a mere 6% (respectable except in comparison to the runaway performance AWS delivered). Analysts are predicting SAP will grow by a similar amount in 2018, but project that AWS will deliver 38% growth (FactSet).
However, when we focus in on pure Cloud services, AWS retains a formidable lead, in a market which analysts say grew 40% in 2017 and brought in $14 billion according to Canalys. Both Google and Microsoft posted even more impressive growth in Cloud services in 2017 than AWS, with Canalys estimating 76% growth for GCP and Microsoft announcing that its Azure business nearly doubled (increasing 90%).
Customers are wasting $10 billion per year on Cloud services
However, RightScale, a cloud resource management firm, said that this growth was partly fuelled by Cloud services firms overcharging customers. In its State of the Cloud report, it calculates that 35% of a customer’s annual bill on cloud was wasted, which meant a massive $10 billion per year was being spent on unnecessary cloud costs – with $6.4 billion being wasted on AWS alone.
One of the biggest reasons for this overspend is that billing can be hard to understand and pricing models are complex. According to RightScale, AWS has more than 70,000 different price points, with discounts adding another layer of complexity.
Another problem is that Cloud services are now easy for individual business users to buy, which can mean at an enterprise level resources are not optimised and the business ends up overpaying for unused resources.
What this means for B2B service providers
Competing with Web services companies is a difficult game to be in. However, if you’re not already helping B2B customers manage their Cloud resources, maybe this is an area you can add value. Such an offering could be bundled with an SD WAN strategy, as a managed service offering to optimise networks and Cloud services. In large enterprises the savings generated by optimising use of Cloud services can be substantial and redeployed into other revenue-generating areas for B2B service providers.
Primer
Vendors of Cloud cost monitoring and optimisation software include: Apptio, Cloudability, Cloudcheckr, CloudHealth Technologies, Densify, Microsoft, RightScale, Teevity and Turbonomic.
