The 32% Rule: The Epidemic of Cloud Waste

If you are spending $1M annually on the cloud, $320,000 of that budget is likely vanishing into the void.

This isn’t an estimate—it’s the documented reality of modern infrastructure. Multiple industry studies, including the Flexera 2024 State of the Cloud Report, confirm that nearly one-third of all cloud spending is wasted on resources that are either unused, overprovisioned, or forgotten.

The Drivers of Infrastructure Waste

Cloud waste isn’t usually the result of a single catastrophic error. It is a “death by a thousand cuts” caused by four primary patterns:

1. Zombie Resources (35% of waste)

These are “ghost” assets that remain active but serve no business purpose.

• Orphaned Volumes: EBS storage left behind after an instance is terminated.
• Abandoned Load Balancers: Still routing traffic to non-existent endpoints.
• Forgotten Labs: Test environments from projects that were cancelled months ago.

2. The Overprovisioning Tax (40% of waste)

The cloud encourages a “just in case” mentality. Engineers often select instance sizes based on peak-of-peak projections rather than steady-state reality.

• CPU Hoarding: Average utilization across the industry remains under 10%.
• Memory Bloat: Provisioning 64GB for a service that rarely crosses 8GB.

3. The 24/7 Myth (15% of waste)

Running non-production environments (staging, QA, development) around the clock is a massive drain.

Key Insight: Staging environments that run on weekends and overnight contribute zero value while consuming 70% of their potential cost.

4. Storage Sprawl (10% of waste)

Data hoarding without lifecycle policies leads to “hot storage” prices for data that hasn’t been accessed in years.

The Hidden Complexity Tax

Beyond the obvious resource waste, companies are paying a Complexity Tax. Every new managed service adds a layer of proprietary lock-in and a unique pricing model that makes calculating true TCO (Total Cost of Ownership) nearly impossible.

Data transfer charges (egress fees) are the ultimate silent killer. Moving data between regions or out to the internet can often cost more than the storage itself.

Strategic Waste Reduction Checklist

To reclaim your budget, move beyond basic “right-sizing” and implement structural changes:

• Audit Today: List every running instance and its owner. If it doesn’t have a tag, terminate it.
• Automate Scheduling: Set non-production environments to auto-shutdown outside of business hours.
• Enforce Lifecycle Policies: Move logs and snapshots to cold storage (Glacier/Archive) after 30 days.
• Evaluate Repatriation: For stable, high-scale workloads, calculate the ROI of moving to bare metal. The savings often jump from 32% to 70%.

Real-World Impact: The Scale of Savings

• Dropbox: Saved $75M annually by repatriating 90% of user data to owned infrastructure. Their gross margins improved from 33% to 67% between 2015 and 2017 primarily due to this infrastructure optimization.¹
• 37signals: Projected $10M in savings over 5 years by leaving AWS for bare metal servers. DHH noted that for the price of their cloud search/database services alone, they could buy “insanely beefy” hardware.²
• GEICO: Pivoted to a private cloud after cloud costs increased 2.5x over original projections, as detailed in recent industry analysis.³

Executive Summary

Cloud waste is a symptom of a larger problem: the cloud operating model encourages overconsumption. A Puppet survey found that 86% of CIOs are planning to move some public cloud workloads back to private cloud—the highest percentage on record.⁴

For mature organizations, the path to efficiency starts with eliminating waste, but it ends with Infrastructure Sovereignty—owning the workloads that drive your business.

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Ready to see your actual savings potential? Get a Free Cloud Waste Assessment to model your repatriation ROI.

References

Footnotes

1. Dropbox S-1 Filing (2017). Securities and Exchange Commission. Infrastructure optimization and cost savings disclosure. ↩

2. Heinemeier Hansson, D. (2022). Why we’re leaving the cloud. HEY World. ↩

3. Pankow, R. (2024). Why Companies Are Ditching the Cloud: The Rise of Cloud Repatriation. The New Stack. ↩

4. Reed, P., & Tatam, R. (2025). Cloud Repatriation: Examples, 2025 Trends & Tips for Reverse Migration. Puppet. ↩