Cloud spend is heading skyward, according to a recent survey, and is often sparking tension between execs in charge of finance functions and their colleagues in tech.
According to a recent poll of 600 finance and tech leaders in the US and UK by software-as-a-service spending management firm Vertice, 55% of companies are spending more year over year on cloud in 2023. Just 5% of respondents reported their organization saw a decrease. Almost one-quarter (24%) of respondents reported a “significant increase,” while just 1% reported a similarly significant decrease.
Nearly three times as many finance leaders in the survey (26%) reported their top concern on cloud management was cost as tech leaders (9%). What’s more, 44% of finance leaders named their top issue as a lack of “visibility into the cloud environment.”
For their part, technology leaders told Vertice their top concerns were hiring skilled cloud workers (40%) followed by scaling (21%) and visibility (20%), reflecting priorities like hitting deadlines and building buzzy new products.
Cloud services are “very heavily geared towards scaling when you need it, and ensuring, almost encouraging you to take on more resources as you need them,” Josh Wigmore, VP of product at Vertice, told IT Brew. “So, spinning up more development environments, testing out new features, is made super easy…Organizations really aren’t forced to consider the costs of these things when they’re doing them.”
While the advent of on-demand cloud computing has freed customers from the need to run and maintain their own hardware, spending can also get out of control. That’s especially true for businesses making their first cloud transitions without proper governance in place.
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In 2022, a Flexera survey of 753 businesses found they considered just 68% of their cloud expenditures as efficient on average, meaning just short of one-third was being squandered. A recent Aptum poll of 400 senior IT professionals from organizations with at least 250 employees found 52% admitted cloud inefficiencies had led to significant waste.
Unused cloud credits rack up to over one-half of corporate cloud spend commitments at a waste of $300 billion annually worldwide, according to Infosys data. The largest public cloud market segment, software-as-a-service (SaaS), is also rife with overspending.
Spending management platform Productiv’s 2021 “The State of SaaS Sprawl” report found small enterprises have 242 SaaS apps on average, while large organizations of 10,000 or more have 364. Productiv’s report estimated that average engagement with those apps was around 45%, suggesting “less than half of the app licenses in an organization’s portfolio are being utilized on a regular basis.”
With Gartner projecting end-user public cloud spending to hit $600 billion by 2023, the stakes of reducing that waste are high.
“The first thing I always ask is, is the workload better suited for the cloud?” Rob Zelinka, CIO at financial services firm Jack Henry, told IT Brew. “What other benefits are you seeing, to move a workload to the cloud, and how much are those benefits worth?"
If the answers don’t line up, “Perhaps the cloud is not the most cost-effective place to host,” Zelinka added.