As technology leaders manage pressure to control costs, cloud computing expenditures are getting increased scrutiny. Dedicated teams to manage cloud spending and dedicated tools designed to increase efficiencies are two of the measures being employed. The result is that while cloud spending continues to increase, it is at a slower pace than had been expected. The latest Gartner projection posits worldwide growth of 18.5 percent, to $576.5 billion this year, slightly less than the 18.8 percent uptick previously forecast. This follows a Synergy Research finding of 27 percent Q4 U.S. growth, lagging the 31 percent expected.

The recent ebb “follows what some CIOs have described as a poor return on their cloud investments, with unrealistic expectations around what the technology will cost compared with running data centers forcing them to re-evaluate their cloud plans,” The Wall Street Journal reports.

After rapidly shifting to a cloud workflow to support remote capabilities during the COVID-19 pandemic, “many companies ‘didn’t necessarily think about things like cost management, security, resilience, operational efficiency,’ said Tracy Woo, an analyst at market research firm Forrester Research,” according to WSJ, which says the current persistent fears about inflation make controlling cloud spending “nonnegotiable.”

A Q4 survey by Flexera Software found 82 percent of enterprise firms surveyed cited controlling spending as the top cloud challenge, “the first time in over a decade of conducting the survey that cloud spending has ranked above cybersecurity,” per WSJ. The increased complexities of conducting business digitally combined with economic pressures will drive 70 percent of enterprise companies to better manage cloud spending by 2024, IDC predicts.

“Being able to forecast cloud usage is critical” for enterprise outfits, particularly those “spending with multiple cloud providers in exchange for a discounted rate,” WSJ writes.

The large U.S. cloud vendors — Amazon, Microsoft and Google — have recently reported cloud revenue growth slowdowns. In the most recent quarter, Microsoft Azure reported 31 percent growth, compared to 35 percent the preceding quarter. Google Cloud growth dropped from 38 percent to 32 percent, while AWS went from 27 percent to 20 percent.

“Executives from all three cloud giants have said customers are optimizing or reining in their cloud spending, citing economic factors,” WSJ says, noting “getting cloud bills under control isn’t as easy as lowering IT spending in areas like hardware or software,” because cloud costs can increase or decrease depending on a variety of factors. Principally, costs are calculated based on network requirements, CPU usage and storage capacity, explains Tech Target.

According to a new cloud efficiency study by Deloitte, return on investment “depended more on leadership and the culture within their organizations” than on the amount of money spent, Deloitte Consulting chief strategy officer David Linthicum wrote on Forbes.

Related:
How to Overcome Communication Barriers Between Cybersecurity and Business, Forbes, 3/3/23