In the face of the inflation-led soft economy, many businesses are reevaluating their cloud spending as a cost-cutting measure.

Amazon and Microsoft, two industry leaders in cloud computing, took note of the shift. “With the ongoing macroeconomic uncertainties, we’ve seen an uptick in AWS customers focused on controlling costs,” Brian Olsavsky, CFO of Amazon, said in a Q3 earnings call. While Satya Nadella, CEO of Microsoft, said on an earnings call on January 24, “Just as we saw customers accelerate their digital spend during the pandemic, we are now seeing them optimize that spend.”

Carrying the labels of "flexibility," "scalability," and "cost-effectiveness," cloud providers do make it easier for companies to operate in practice, but in financial terms, it may not look like what they stand for.

David Heinemeier Hansson, also known as DHH, the creator of Ruby on Rails and co-founder of 37signals, lamented in an October 2022 blog post that cloud service providers had failed to fulfill their promise to reduce his company's operational expenses. In fact, as the company has grown, its cloud operations expenses have skyrocketed. 

Cloud providers' rising charges for operation and maintenance services lead to higher monthly bills, and worse, vendor lock-in takes bargaining power away from users

Why are the bills getting out of control? If cloud service providers assume responsibility for computing, storage, network leverage, etc., the burden on business owners should be reduced, not increased.

"Proprietary services are pricey, and even if you choose to run open-source alternatives on the cloud, they are not free, such as RDS, OpenSearch, ElasticAche, Monitoring, etc. Cloud service providers continue to impose exorbitant usage-based fees," Chen Hao, founder of MegaEase, a cloud-native platform based on open-source solutions, told PingWest.

Once a digital business is launched, more specialized services, ranging from IaaS, PaaS, and SaaS, need to be brought into the cloud platform to support its growth. Free, open-source services are being favored by business owners over proprietary services in an effort to save expenses.

"When using open-source services, the operating fee charged by cloud providers is the source of expenses," explained the cloud expert, "If your business is just getting started, you won't feel the increase, but as it steadily expands, you'll see the cost hike. In some cases, it can even account for half or more of the cloud computing bill.”

This is the side-effect of having a cloud computing provider manage your operational tasks. While it does lower the barrier to entry for startups and performs well in terms of horizontal scalability and high availability, it is not a cost-effective alternative as the business grows incrementally. 

Additionally, outsourcing operational work to cloud giants like AWS or Azure increases the risk of vendor lock-in, which can trap a business in a passive state. Due to the proprietary nature of the provider's technology, services, and data formats, customers may find it challenging or impossible to switch to a different cloud provider, a situation known as "vendor lock-in.”

Databases, for instance, are notoriously difficult to migrate once they've been set up with a certain cloud provider, as the cloud migration process involves moving data to a completely different type of environment, which can lead to data reformatting or even compatibility concerns.

Once users are locked in, it is difficult, if not impossible, for them to negotiate pricing, convert to other cloud vendors offering better service or pricing, or take advantage of new technologies and advances from other vendors.

DHH's call to "leave the cloud" is unrealistic for most businesses, but there are ways to gain more control over your cloud spending, the cloud expert suggests

After complaining about the rising cost of cloud computing, DHH decided to move the majority of his company's operations onto its own servers, which was successful. Without specifying the previous spending number, Fernando Álvarez, an SRE at 37signals, wrote in a recent tech blog post, saying that “getting this massive spend down to just $3.2 million has taken a ton of work."

Businesses can save a lot on their bills if they choose to deploy open-source services from scratch rather than outsource the work to a cloud provider. But not every company can accomplish what 37signals has, as the company itself is tech-savvy and employs the industry's finest engineers.

For most business owners, the challenge is that additional IT staff is needed to get the deployment tasks done and carry out the operations work such as monitoring, configuration, scaling, backup, etc., which could mean falling short of the cost savings target.

"The most practical and money-saving approach is to reduce the complexity and barriers, as well as set up the same open-source services that cloud providers can offer." "Apparently, you need a number of tools to assist you in deploying high availability open-source services, and performing the elaborate operation(configuration/monitoring/backup/scaling) works at a much lower expense than letting a cloud vendor do it all for you," Chen added.

As the "moving to the cloud" trend reaches a relatively stable phase, the need for cost reduction grows; therefore, Chen and his partners established MegaEase in 2017, empowering business owners to gain better control over their cloud spending. The startup is quite active on GitHub, where it oversees multiple open-source projects.

Prior to founding the company, Chen worked as a software development expert at Thomson Reuters, Amazon, and Alibaba Cloud. The entrepreneur, who has more than 20 years of programming experience, is also influential in China's tech business, since his tech blog postings and technological insights have inspired a large number of young programmers.

According to the founder, his company, which counts MiraclePlus (formerly Y Combinator China) as an investor, has a substantial number of engineers with extensive experience in cloud deployment, and with the company's solution, a basic service on the cloud can be set up within 5 minutes. 

The major works that MegaEase can do to reduce expenses without increasing workload are as follows:

• Using open-source solutions with a bundle of operation tools to replace the proprietary cloud service
• Maximizing the utilization of assets
• Support the hybrid cloud or multiple cloud deployment

By switching from proprietary services to open-source ones and using the MegaEase self-deploying architecture, it enables a Chinese online education company to slash its annual cloud computing spending from $4 million to $1.4 million.

Additionally, the company may support business owners in navigating the complexity of cloud computing. Today's cloud computing landscape is immensely complex, with a multitude of services that can be perplexing to individuals who are not experts in the field.

For instance, starting a streaming business often requires numerous components, such as a CDN, database, cache, message queue, etc., but you may lack the knowledge and resources to determine which services to employ and how to integrate them into the cloud without friction.

But these are exactly the kinds of challenges that Chen's team thrives on. Small and medium-sized businesses (SMBs), in his words, prefer a vehicle that’s assembled and ready to hit the road rather than trying to piece it together from a bunch of auto parts.

As a result, the company offers a range of solutions, including microservices governance (service discovery, resilience, configuration, and performance management), traffic management (canary deployment, high concurrency, and online performance testing), high availability open-source software operation, CI/CD with Github and Docker/K8s, and more, that can quickly help enterprises build the vehicles they ask for.

Chen asserted that with services like those offered by MegaEase, enterprises will be able to become less reliant on cloud providers and enjoy greater independence. "Having an experienced third-party team manage deployment and operations frees you from vendor lock-in," he says, "and you'll be able to simply move between cloud providers while maintaining fast, dependable customer service."

By building immeasurable infrastructure and binding with open-source services, the cloud giants have certainly constituted a monopoly, and users have had to compromise for ever-rising bills. “AWS' profit margin is almost 30%... the margin is bound to soar as the giant plans to extend the useful life of its servers and networking equipment," DHH pointed out in his blog post.

Perhaps it is time to take more control of your cloud services into your own hands in exchange for more robust financial statements that can weather economic storms.

Photo by Austin Distel on Unsplash