Cloud infrastructure is becoming a barrier to growth
Research released today reveals that cloud infrastructure has become the second-largest expense for tech companies, following headcount; averaging 10 percent of revenue and increasing rapidly. What’s more nearly 90 percent of companies report that it's directly affecting profitability.
The study from Cloud Capital surveyed 100 CFOs and senior financial decision makers within SaaS and technology businesses of up to 1,000 employees across the US and UK.
It reveals a shift taking place in the last 12-18 months, with cloud now typically six percent to 12 percent of revenue in SaaS businesses and as high as 30 percent to 40 percent in AI-native companies. And while engineering teams have historically owned cloud optimization, the financial weight and unpredictability of cloud spend have driven CFOs to assume responsibility directly or to implement joint finance–engineering ownership models.
This move results in more predictable costs, with 32 percent of finance-involved teams achieving highly predictable forecasts (less than five percent monthly variance) compared to 16 percent of engineering-owned teams.
Edward Barrow, CEO and co-founder at Cloud Capital, says, “CFOs report month-to-month variability of five–10 percent as standard. Right now, cloud’s unpredictability is disproportionate to its size and completely out of line with what CFOs expect from any other major expense. That’s the financial tension driving this shift toward tighter governance and finance ownership.”
When asked about the focus for 2026, improving forecast accuracy (44 percent) tops the list of cloud cost priorities for CFOs and finance leaders at young, fast-growth technology companies, alongside increasing forecast accuracy (44 percent). However, when it comes to AI investments which now represent 22 percent of total cloud spend, finance leaders are taking a balanced approach. 72 percent say they would accept short-term cost increases for AI features that drive user growth.
Among other findings 71 percent of businesses re-forecast their cloud costs at least quarterly. 80 percent have increased cloud spend in the past 12 months and 73 percent expect further increases.
Barrow adds:
Cloud infrastructure is now central to business performance but as costs rise so does the pressure on finance teams to predict, justify and optimize spend. The findings underline a maturity gap between cloud adoption and financial control. For CFOs, the next frontier is establishing agile, data-driven financial governance that can balance innovation with cost predictability.
We are addressing one of the digital economy’s most pressing inefficiencies: the mismanagement of cloud infrastructure, a $294 billion market. This challenge will only intensify as AI’s share of cloud spend continues scaling at pace.
The full report is available from the Cloud Capital site.
Image credit: ra2studio/depositphotos.com
