A recent survey of IT and financial leaders has found that 72% of respondents feel that AI-themed cloud spending is becoming unmanageable. According to the poll of 500 IT and finance professionals commissioned by expense and asset management firm Tangoe, spending of this type has increased by 30% alone this year — an intolerable rise for certain firms as yet unsure of the rate of return on their investment in increased compute capacity.
“GenAI is creating a cloud boom that will take IT expenditures to new heights,” said Tangoe’s chief product officer, Chris Ortbals. “Left unmanaged, GenAI has the potential to make innovation financially unsustainable.”
Disquiet over AI-fuelled cloud spending rise
The study highlighted several difficulties in managing cloud expenses. 80% of respondents, for example, reported that private cloud costs are particularly challenging to handle. Despite these challenges, 95% of organisations plan to shift some resources from public clouds to private clouds, with an average of 47% of resources expected to be repatriated.
The survey also revealed that software overspending is an ongoing issue. 38% of Software as a Service (SaaS) spending was attributed by respondents to shadow IT, while another 67% admitted that their productivity software licences, such as Microsoft 365 and Google Workspace, are often underutilised.
Managing shared cloud expenses remains a concern, too. While 93% of respondents agree that these costs should be distributed across their organisations, 53% find chargeback processes complex and time-consuming.
An overwhelming majority – 92% of those surveyed – reported an increase in cloud spending. The top three reasons cited for this rise were AI (50%), GenAI (49%), and automation (36%).
On average, the companies surveyed spend $40m annually on cloud services. This expenditure is divided relatively evenly across key categories: Software as a Service (SaaS) accounts for 28%, Private Cloud for 28%, Infrastructure as a Service (IaaS) for 25%, and Unified Communications as a Service (UCaaS) for 19%.
One potential solution to these challenges identified by respondents was the refinement of Financial Operations (FinOpes) practices. 94% of cloud cost practitioners believe FinOps must evolve to cover SaaS management in addition to Infrastructure as a Service (IaaS).
Increased productivity could be another key benefit of tighter cloud cost management. 94% of respondents consider enhanced productivity to be a significant outcome of effective cloud financial management. Security and productivity improvements are also highlighted as important outcomes, further demonstrating the need for comprehensive FinOps solutions that address both financial and operational concerns.
Despite the availability of advanced tools, 63% of respondents continue to use either manual processes (21%) or native tools provided by cloud service providers (42%) to manage their cloud costs. This reliance on traditional methods has contributed to concerns about the potential for costs to spiral out of control.
“The cloud’s hidden costs and unpredictable invoices can become the silent killer of GenAI,” said Ortbals. “The more urgently companies adopt comprehensive cost management FinOps strategies, the easier it is for them to turn GenAI’s promise into lasting innovation instead of runaway expenses and technical debt.”
Recently, a survey by Wipro indicated that demand for generative AI services is drastically expediting cloud adoption across enterprises. As per the findings, 54% of businesses report the rollout of AI services as the key driver behind their increased investment in cloud infrastructure.
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