Why many enterprises waste money in the cloud Otesanya David March 26, 2022

Why many enterprises waste money in the cloud

Why many enterprises waste money in the cloud


IT has a long history of problems with budgets and money. Budget overruns for IT projects are more the rule than the exception. 

Typically, there are a few core culprits. First, many in IT, including myself until about 20 years ago, don’t really understand budgeting or how to predict what things will cost. Most choose whatever resources they think they will need with the objective of achieving the best possible outcome. Second, most budget managers and other leaders have a tendency to expect overruns, as there are rarely repercussions for spending more than they planned.

Extra expenses became more perplexing when enterprises began to leverage cloud computing but the overruns continued. I really thought most of the overspending would go away with the rise of cloud computing. After all, cloud costs are much easier to predict because of utility-based pricing. Also, the cost models are much cleaner. Companies don’t have to deal with data center cost allocations, physical equipment costs and deprecation, and enterprise software license costs that keep going up when the service and value of the software keep going down. 

However, enterprises waste one-third of today’s cloud computing investments, according to a new survey of more than 750 businesses. This latest Flexera survey on the state of cloud computing reveals that companies have a hard time deploying cloud projects that work at their most efficient. Instead, a big chunk of cloud investment goes to waste. 

When the survey asked how much of cloud expenditure is efficient, the estimate was 68%. If you do some quick math, this leaves 32% waste in cloud spending. Also, survey respondents reported that cloud projects come in at an average of 13% over budget.

Although there are many reasons for cost overruns, this is egregious. Why is this much money being wasted? I have a few observations.

Copyright © 2022 IDG Communications, Inc.


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