Cloud cost management remains a top challenge for organizations despite growing FinOps adoption and the rise of generative AI, according to Flexera’s annual State of the Cloud Report. The report, comprised of responses from over 750 technical professionals and executive leaders worldwide, highlights the hurdles companies face in managing cloud expenses as they expand their cloud infrastructure and leverage AI.
Managing cloud costs is a persistent issue for 84% of organizations, reflecting ongoing difficulties despite advancements in cloud strategies. The increase in FinOps teams—59% of organizations have such teams—demonstrates a concerted effort to address these cost challenges through dedicated cost-management groups. Successful FinOps implementations often involve cooperation among stakeholders and executive support.
Generative AI is gaining significant momentum, with 72% of organizations integrating these capabilities. Around 50% are using GenAI services in the public cloud, and another 33% are experimenting with them. This increased AI adoption is affecting cloud architecture, as firms rely more on data warehouse technologies to support AI functions.
Cloud workload distribution shows that only 21% of workloads have been repatriated to on-premises environments, hinting at a continued commitment to cloud strategies. Managed service providers are also notable, as 60% of organizations engage them for cloud management to optimize performance and cost.
The structuring of FinOps teams varies but typically includes small groups to larger teams. The success of these teams hinges on stakeholder involvement and executive commitment. Generative AI’s influence on cloud architecture also signifies a shift, with a reliance on AI services rather than developing proprietary solutions.
Cloud repatriation sees some firms bringing workloads back on-premises due to initial, unoptimized cloud migrations that led to unexpected costs. Repatriating or refactoring these workloads is an attempt to better manage costs and performance.
The report also indicates that 57% of organizations currently prioritize cost over sustainability. However, increasing regulations may push companies to balance financial efficiency with environmental compliance.
The Flexera State of the Cloud Report demonstrates the challenges and evolving strategies in cloud computing as organizations manage costs, adopt AI technologies, and refine their cloud strategies. The growth of FinOps teams signals serious attempts to control cloud expenses, although success requires collaboration and executive backing. As AI continues to shape cloud infrastructure and sustainability concerns grow, firms must balance these factors to remain competitive.
