A survey of 300 U.S. finance leaders at organizations with more than $50 million in revenue suggests companies are looking to fund artificial intelligence (AI) initiatives in part by optimizing cloud spending.
Surging cloud costs
A survey conducted by market research firm Censuswide on behalf of Azul, a provider of a Java application platform, found that cloud computing costs are rising rapidly for most organizations. In fact, 88 percent of respondents reported cloud costs are climbing quickly, with one‑third noting those expenses are now significant. Only 9 percent expect cloud spending to remain flat.
Concern about the business impact is widespread. A full 90 percent said cloud costs are affecting their bottom line, while two‑thirds (66 percent) reported that cloud spending has become a board‑level issue. Nearly 70 percent said they currently waste between 10 percent and 30 percent of their cloud spend.
Not surprisingly, many organizations are looking for ways to regain control. Nearly half (45 percent) said the primary financial benefit of cloud cost optimization is increased budget flexibility to fund innovation, including artificial intelligence (AI) and digital initiatives. Other benefits cited include improved margins and profitability (42 percent), better forecasting and budgeting (39 percent), stronger alignment between IT spending and business outcomes (39 percent) and higher utilization of existing infrastructure (37 percent).
At the same time, new pressures are emerging. More than 40 percent (43 percent) said AI adoption is adding new layers of workload complexity, making cloud spending even harder to predict and control.
Looking ahead
Improving performance and uptime (43 percent) tops the list of priorities over the next 12 months. Followed by reducing overall cloud costs (39 percent), maximizing profitable growth from cloud investments (38 percent), gaining better visibility into current spending (35 percent) and improving compliance and governance (34 percent).
The challenge of AI is that it is driving cloud computing costs to the point where organizations need to get the most out of every dollar allocated. The painful truth is that demand for cloud infrastructure is now far outstripping the available supply, resulting in rising prices that show no signs of abatement any time soon.
There are, of course, a lot of reasons why costs are rising that involve everything from processors and memory shortages to AI workloads that are consuming a much larger percentage of data center capacity. The key takeaway for managed service providers (MSPs) is that none of these challenges are likely to be resolved any time soon. As such, the need for MSPs that have cloud infrastructure optimization expertise is all but assured for many more years to come.
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