Flexera announced the release of its 2025 State of the Cloud Report.
The 14th annual report, which polled more than 750 technical
professionals and executive leaders worldwide who were involved in the
use of cloud, uncovered that 84% of respondents believe that managing
cloud spend is the top cloud challenge for organizations today. With
cloud spend expected to increase by 28% in the coming year, the report
findings suggest that many respondents are rethinking their existing
cloud cost management strategies.
As organizations continue to invest in artificial
intelligence (AI), nearly one-third (33%) of organizations are spending
more than $12 million annually on the public cloud alone. With cloud
budgets already exceeding limits by 17%, organizations are increasingly
turning to managed service providers (60%) and expanding use of their
FinOps teams to regain control over spending (59%). In fact, the number
of respondents that use, or plan to use, a FinOps team increased by
eight percentage points year over year.
"AI is in its prime with
no indication of losing momentum," said Jay Litkey, Senior Vice
President of Cloud and FinOps at Flexera and Governing Board Member at
the FinOps Foundation. "I suspect we'll see further acceleration of AI
use as more organizations embrace their own AI investments and
technology vendors introduce agentic AI into their existing toolsets. To
stay on budget and accurately forecast for future needs, organizations
need to fine-tune how to track and manage their cloud spend and use with
FinOps now-or risk a significantly wasted investment."
While
estimated wasted cloud spend is falling, the adoption of AI-related
public cloud services is rising. In addition to an increase in the use
of data warehouse services (76%), often leveraged to feed AI models,
generative AI (GenAI) public cloud services use is booming with 72% of
organizations reportedly using the technology either extensively or
sparingly, as compared to 47% in 2024.
"FinOps is taking center
stage as many enterprises prepare for the onslaught of AI services to
eat away at their cloud resources and budgets," said Becky Trevino,
Chief Product Officer at Flexera. "As we're witnessing an increase in
FinOps adoption, we're simultaneously seeing estimated wasted cloud
spend trending downward. This illustrates the power and promise of
FinOps practices, proving it is a winning strategy for organizations
worldwide."
Additional key findings include:
- Cloud repatriation is starting to slowly unfold.
Today, analysts and experts have indicated that some organizations are
moving their workloads back to non-cloud environments (their own data
centers and/or co-located/hosted environments). While this is
beginning to happen, only a minority (21%) of cloud workloads have been
repatriated. However, the ongoing migration to the cloud and net-new
cloud workloads outstrip these cloud exits, resulting in continued cloud
growth.
- Cloud sustainability initiatives are becoming top-of-mind.
Organizations are highly focused on fine-tuning their sustainability
practices. Over half (57%) of respondents reported they have, or plan to
have, a defined sustainability initiative in place within twelve
months, including carbon footprint tracking of cloud use. Regardless,
saving money is still top of mind given 57% said cost optimization takes
priority over sustainability.
- Cost efficiency continues to be the shining metric.
Eighty-seven percent of respondents indicated that cost
efficiency/savings is the number one metric used for assessing progress
against cloud goals for the sixth year in a row, a 22-point increase
from 2024. Organizations are also focused on the volume of workloads
migrated (up from 36% in 2024 to 78% in 2025), and cost avoidance, which
saw an uptick from 28% to 64%. This continues to validate the narrative
that more workloads are moving to-or being developed in-the cloud,
making a case for increased cost optimization tools.
- Organizations are extending the scope of cloud costs to SaaS and software licensing.
Those responsible for managing cloud use and costs are increasingly
expanding their world beyond public cloud (IaaS/PaaS) to more
effectively balance costs, usage and future spend. Seventy-nine percent
of respondents indicated that they are now involved in cloud software
decisions, with 69% involved in managing use and/or cost of SaaS
applications and 64% are managing the use and/or costs of cloud licenses
(or software running in the cloud).
- Amazon Web Services (AWS) and Microsoft Azure competition remains heated.
According to those surveyed, AWS and Azure continue to compete for the
top spot regarding public cloud adoption. Recent data shows that AWS
maintains a lead among SMBs-53% of SMBs reportedly use AWS, compared to
29% leveraging Azure. Google Cloud Platform holds the third spot, with
just under half (46%) of all organizations running some or significant
workloads on it.
For more information on the Flexera 2025 State of the Cloud report, please visit: https://info.flexera.com/CM-REPORT-State-of-the-Cloud.