What we can learn (about technology) from Snowflake and Instacart

What we can learn (about technology) from Snowflake and Instacart

The Snowflake Instacart Situation

There’s a lot to unpack with this recent Snowflake, Instacart debacle, and while Instacart has no doubt gotten value from their massive spend on Snowflake, the more exciting part of this story is the millions of dollars in savings as a result of not relying on Snowflake as a one-stop-shop. The waters become muddy because CEO Snowflake, Frank Slootman, sits on the Board of Instacart, and the accusations flying around about these savings and how they were derived – something Snowflake refers to as “misrepresented by some on social media” in this clarifying blog: Snowflake and Instacart: The Facts. The extent to which Snowflake savings come from Snowflake’s or other vendor’s initiatives is unclear, but the story caught my attention because Yellowbrick has customers precisely doing this.

A Hybrid Technology Stack Leads to Savings

Over the past six months, Yellowbrick has met with over 100 Snowflake customers to explore cost-saving strategies. We’ve found that Snowflake customers like the platform for its user-friendly onboarding experience and seamless integration with diverse data sources. The pay-as-you-go pricing model also resonates, ensuring users pay for the resources consumed and costs tied to value. However, the consistent grumble is that Snowflake is expensive due to inherent inefficiencies. Resource consumption escalates rapidly in unexpected ways (discussed in this blog), resulting in monthly bills that make a CFO’s hair stand on end. Unfortunately, users don’t realize how deep they are in the hole until it’s too late. Over time, users optimize consumption as they become more proficient with the technology. This is Snowflake in the wallet.  Reported net revenue retention (NRR) has declined from its peak of 177% in January 2022 to 142% in July 2023. While 142% is a respectable NRR, the trend is of concern, as discussed in this blog.

The Instacart case study underscores the potential for substantial savings by optimizing workload performance or by using alternative solutions to handle specific workloads. Last week, we shared a customer story featuring NCSolutions, which leverages Yellowbrick as a data engineering platform to consolidate, correlate, transform, and perform in-depth analytics before loading the results into Snowflake. The architecture in this use case is also simplified because of the one-way data flow from Yellowbrick to Snowflake, with Snowflake as the single source of the truth and Yellowbrick providing a transient data store facilitating essential low-cost pre-processing steps necessary to get there.

Summary

The Snowflake-Instacart episode has sparked valuable conversations about optimizing technology investments. Snowflake remains popular among its users, offering undeniable advantages, but exploring strategic diversification can lead to substantial cost savings, as real-world examples illustrate. As the recession deepens and the cost of borrowing increases, pressure will be on IT to cut costs, particularly where these savings rank in the millions. Yellowbrick is committed to assisting organizations in navigating these complexities and finding the right balance between technological efficiency and cost-effectiveness.

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