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Startup Cloudyn Helps Customers Curb Cloud Spending

The increase in software delivered over the web has spawned startups looking to find their niche in the cloud computing market. Israel-based Cloudyn launched last year to address a corporate pain point companies didn’t even know they had until the startup showed it to them: Many companies were throwing away money on the cloud. Cloudyn’s software, currently free, is available to clients of Amazon Web Services around the world, more than 200 of whom are using it. Rackspace clients are testing it in beta.

The costlier alternative of buying

IT leaders purchase cloud computing so that they can cut back on the costlier alternative of buying and managing their own hardware. Cloud is particularly popular for what businesses consider non-critical applications just as human resources software. However many IT leaders are not using all of the computing resources they purchased from vendors just as Amazon Web Services, widely considered the leading vendor in the space. Companies that buy and run their own computing resources tend to acquire more computing and storage capacity than they need so they don’t have to purchase more later.

Cloudyn in May found 100 Amazon clients were wasting 40% of the money they spent on AWS by provisioning too many computing resources for some tasks and letting other computing workloads go unused. Such cloud computing waste is an ongoing problem for CIOs, said Cloudyn CEO Sharon Wagner, who said his software compares how much computing capacity clients are using to how much money they spend. Businesses give Cloudyn their Amazon account credentials to monitor their computing, storage and database consumption. Amazon offers a basic bill calculator and monthly billing alerts for clients. However Wagner says Cloudyn is more tailored to each company’s needs, monitoring the individual companies' actual usage first to build specific, customized recommendations on the right cloud configuration and pricing model.

Wagner said that when he left CA in early 2011 he realized that although cloud was catching on among enterprises looking to lower their costs by leasing computer resources from outside vendors, the model made it difficult for CIOs to optimize their IT spending. “The more cloud adoption increases within enterprises, CIOs and CFOs must have business solutions to manage their cloud,” Wagner said. So Wagner, Goldberg and Tavor built the Cloudyn prototype and tested it with users just as Evolven Software. Positive feedback led to $1.5 million in funding from Israeli venture capital firm Elron Electronic Industries last September.

One year afterwards launching, Cloudyn employs eight people and has spent $500,000 of its funding. Although Wagner said Cloudyn has enough cash for the then and there 12 months, he is in discussions with other venture capital firms for additional funding. Neither Wagner nor Veinrib would provide additional details about privately held Cloudyn's finances. Nevertheless Wagner said he expects Cloudyn to start generating earnings in July by charging for recommendations on how companies can curb what they spend on cloud computing. The company's basic cloud monitoring service will remain free.

Office in the U.S.

Cloudyn is opening an office in the U.S. later this month, hiring a business development manager. The manager, who Wagner declined to name because he has not started but, has worked at Oracle and Symantec. He will be based in New York to help the company expand its sales as the company begins to roll out to Rackspace clients, and in the long run, Microsoft Windows Azure clients.

More information: Wsj