Enterprises overspend by millions on cloud services

New research reveals enterprises are over-spending on cloud services by up to $8.5 million, as IT leaders grow frustrated with poor management tools, vendor-lock in and issues with accessing data.

A study from Couchbase of IT decision makers at enterprises with more than 1,000 staff finds a typical annual spend on cloud services to now stand at $33 million. However, functions that are not currently meeting businesses expectations account for over 35 percent of the total cost.

The report shows 36 percent of enterprises say cloud services adopted in the last three years had not met expectations, while 56 percent say past cloud decisions have made digital transformation projects more difficult in 2021 and 48 percent say they made them more expensive.

Factors adding to costs include not having enough insight into spend or ways to optimize costs; the need to improve security and compliance functionality; inflexible pricing plans that don’t give enterprises what they need in a single package; management tools that don't give the control needed; data not being stored where needed to meet regulatory or performance requirements; and vendor lock-in.

In addition 61 percent of enterprises have had to restrict their digital transformation ambitions because of challenges with cloud services, while 58 percent have chosen cloud services that didn't give the ability to scale the business to meet demand.

"There's no denying the impact of the cloud, from giving large enterprises increased scalability and agility, to giving smaller enterprises access to services and applications they could never implement in-house," says Ravi Mayuram, chief technology officer of Couchbase. "Businesses believe they are getting what they need, or else we wouldn’t be seeing this seemingly unstoppable momentum. The question is whether they could be getting even more -- $8.75 million is too much to just be a cost of doing business. If enterprises raise their expectations and service providers address inefficiencies, they could open up new opportunities for digital transformation -- or simply reduce their costs."

Overall though enterprises are positive, 95 percent say that increased movement of infrastructure to the cloud is 'inevitable'. By 2025 those surveyed want 58 percent of their IT spend to be in the public cloud and say that they are currently more than halfway (56 percent) towards meeting that goal.

Asked to identify their top concerns around new cloud infrastructure, security of data is identified by 43 percent of respondents, followed by managing data in the cloud (33 percent) and future-proofing to meet future digital needs (31 percent), while 30 percent are concerned about keeping costs under control in the future.

Mayuram adds:

If costs and concerns keep mounting, we will see more organizations struggling to meet their overall business ambitions. The key to a lot of these concerns, and the additional costs enterprises are facing, is sprawl. The more control cloud customers have over their data, including where it is stored and how it is managed, the more confident they will be that it is secure, that their services are future-proofed, and that they have costs under control.

We know there's no putting the cloud genie back in the bottle, and nor should enterprises want to. Instead, we need to ensure it lives up to every expectation.

You can get the full report from the Couchbase site.

Photo Credit: Rrraum/Shutterstock