Dive Brief:

• Over half of corporate cloud spend commitments are unused, amounting to more than $300 billion in untapped credits, according to a new Infosys report. The IT consulting and services firm compared the dollar value of currently contracted services against cloud provider SEC revenue declarations.
• The surplus hasn’t sated enterprise appetite for cloud. Two-thirds of more than 2,500 global business leaders surveyed by Infosys said their companies increased cloud spend this year. The majority of respondents, four in five, expect to increase spending next year.
• While replacing or updating legacy systems continues to drive adoption, companies are now less inhibited by the cost. Growth and transformation were three times more important than saving money through cloud migration, the report found.

Dive Insight:

As technologies mature, priorities shift.

Vendors typically sell cloud infrastructure and services in chunks to be used within a designated time frame. Customers pay as they go but are committed to fulfill the terms of the contract. Cloud providers report the revenue as it arrives, creating a delta between committed spend and usage, as detailed by Infosys.

A key lesson from the first decade of enterprise cloud migration was access to more powerful, scalable compute drives up usage. Cost per instance may decline, but overall spending grows.

“Cloud can be a black hole for money,” Chris Leigh-Currill, managing partner and global consulting cloud lead at Infosys, said in the report.

Despite growing cloud bills, companies are largely pleased with the migrations results, Infosys found. 

Hybrid ecosystems have given way to multivendor strategies, the report found.

Two-thirds of respondents contract with three or four cloud providers, a 75% increase in the proportion of enterprises with multicloud strategy compared to 2021. Most of those companies partner with all three of the largest hyperscalers, AWS, Microsoft and Google Cloud, according to Infosys.

The growing appetite for cloud has further fueled multicloud, leading enterprises to seek out the right cloud at the right price for each use case. The percentage of respondents with only one cloud provider decreased to fewer than 1 in 10, from just over 1 in 5 two years ago.

In the diminishing number of cases where companies commit to single cloud, deviations from the plan are not uncommon, the report said.

“Even if a company has an expressed preference or a strategic reason to go all-in with a particular cloud, a department will inevitably find a reason to stay with an incumbent or opt for a service or solution from another operation,” Leigh-Currill said.

Managing deployments, unlocking data streams and tying costs back to the business have emerged as looming challenges for the CIO. More than one-third of respondents reported grappling with siloed deployments and 40% admitted their organization has lax cloud governance.

Oversight practices outlined by the FinOps Foundation provide a practical roadmap for rationalizing cloud spend, guiding organizations through the process of monitoring, optimizing and ultimately predicting costs, the report said.