As huge cloud bills hit recession-wary companies, Amazon promises change

The news: Amazon Web Services (AWS) is increasing its efforts to help customers reduce spending so they’ll remain loyal and spend more over the long term, per Insider.

• An advisory team reportedly speaks with over 1,000 companies each year to help them cut costs. One such company, Airbnb, has a multiyear AWS contract worth at least $1.2 billion, per Insider.
• AWS is one of several major cloud providers in talks to join FinOps, a Google-backed, nonprofit, cloud-finance-management firm that lets companies view their spending from all cloud providers in one Mega-bill.

How we got here: Reports have been swirling this year about cloud customers getting slapped with astronomical bills from the top three providers—AWS, Microsoft Azure, and Google Cloud. The rise of economic uncertainty is making cutting cloud costs a top business priority, threatening Big Cloud’s bottom line.

• Amazon, which has the largest share of the cloud market at 38.9%, per Insider, is a focal point for cloud-spending troubles.
• “The cloud vendors do not make it easy to figure out, ‘My bill just skyrocketed from $10,000 to $100,000 this month. Why?’” said Joe Duffy, CEO of Pulumi, a cloud startup that primarily uses AWS.
• Such billing surprises, in addition to high-priced contracts they’re locked into, have prompted companies to build their own infrastructure or shop around for better cloud deals.

Actions speak louder: Customers ultimately care about the contents of their monthly cloud billing statements, not lofty promises made by providers. A better strategy for cloud providers is to give all customers cost-saving deliverables.

• One such method is to offer real-time billing forecasts throughout the month that also provide an easy-to-understand spending breakdown.
• Another potential strategy is to focus on offering innovative cloud tools that help companies justify the ROI of cloud spending.
• If those locked into contracts feel they’ve been overpaying, they may discontinue the service once the contract expires. Providers can preempt churn by offering incentives while contracts are still active.
• Partnering with third-party cloud-management firms can help customers trust that their bills are accurate.