A new survey by cloud governance solutions provider Stacklet reveals that 78% of companies estimate that 21-50% of their cloud expenditure is wasted annually, potentially amounting to billions of pounds in cumulative losses for affected firms.
The “State of Cloud Usage Optimization 2024” report found that preventable mistakes, driven mainly by manual processes, lack of policy enforcement, and the growing complexity of artificial intelligence (AI), are causing significant financial strain. Some companies report losing over $50,000 per month, with 15% of respondents report monthly losses exceeding $75,000.
Despite these challenges, global spending on public cloud services is projected to reach $805 billion in 2024, doubling by 2028. According to the International Data Corporation (IDC), the public cloud market is expected to grow at a compound annual growth rate (CAGR) of 19.4% over the next five years. Software as a Service (SaaS) will dominate, accounting for more than 40% of this expenditure.
“Enterprise leaders have spoken: cloud costs are skyrocketing, as are preventable mistakes that lead to increased waste,” said Stacklet co-founder and CEO Travis Stanfield. “What’s more, the increased use of AI is fuelling complexity and exacerbating cloud usage and spend. This is why greater visibility and taking timely action has become a top priority for enterprises. All enterprises need to temper cloud waste and lower cloud spend.”
AI and SaaS demand seemingly fuelling cloud waste
The survey identifies several key drivers of rising cloud costs. AI is a significant contributor, with 82% of respondents acknowledging that AI initiatives are increasing cloud complexity, with 45% strongly agreeing. However, many companies admit they are not fully optimising AI-related cloud usage, leading to inefficiencies such as excessive data retention, incorrect resource sizing, outdated instance types, and costly AI experiments. Additionally, 51% of respondents estimate that over 40% of their cloud spend could be optimised, and 93% report that at least 10% of their spending is wasted.
Organisations face several obstacles in reducing cloud waste. Over half of the respondents (52%) identified manual processes as a key challenge, while 51% noted difficulties in controlling cloud usage. Furthermore, 47% reported struggles with implementing cloud cost best practices, and 45% cited limited visibility into resource utilisation as a critical issue, all contributing to the inefficiencies in cloud management.
The survey, conducted by Stacklet in partnership with Centiment, gathered insights from 315 cloud professionals in the US. These respondents, responsible for cloud infrastructure and financial operations (FinOps), provided key perspectives on the industry’s cloud usage and optimisation challenges.
The financial impact of cloud management errors is substantial, with 49% of respondents experiencing costly mistakes on a monthly basis. These errors often result in losses exceeding $25,000 per month as per 62% of the respondents. Notably, 15% of respondents report monthly losses surpassing $75,000. Additionally, 88% of respondents face these issues several times a year, with 50% reporting them occurring monthly or even weekly.
This trend, characterised by rising inefficiencies in cloud spend due to factors like AI complexity and poor cost management, has been confirmed by other industry reports. According to the ‘HashiCorp State of Cloud Strategy Survey,’ only a small portion of companies have reached cloud maturity levels necessary to minimise waste, with high-maturity organisations better-managing infrastructure and security practices to reduce costs. In contrast, many companies still face significant hurdles in basic cloud cost management.
Similarly, the FinOps Foundation’s 2024 report highlights that managing AI-related costs is becoming increasingly urgent, especially for large cloud spenders. While AI can optimise cloud operations, it currently contributes to escalating cloud expenses, particularly for companies spending over $100m annually.
Moreover, the Flexera 2024 State of the Cloud Report indicates that 75% of organisations have seen an increase in cloud waste, with an average of 32% of cloud budgets going to waste. Many companies continue to struggle with visibility and resource management, making it difficult to effectively control cloud spending.
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