Executive summary
The corporate world embraced cloud more than 10 years ago, with cloud adoption peaking in 2014 and migration following right after. It arrived as a single, neat solution. Companies with aging data centers and burgeoning digital systems faced a choice: spend heavily to modernize server racks and proprietary networks or move to cloud. Early corporate cloud gracefully aligned the IT department’s desire for modern systems with the business desire for lower costs.
Cloud has now entered a new era. Our research, based on interviews and a global survey of more than 2,500 respondents, shows that companies have moved beyond using cloud for storage and cutting costs — they rely on it for sophisticated solutions, growth, and transformation. In fact, they see so much promise in cloud solutions that they continue to invest in cloud while under-utilizing the cloud they have. Further complicating matters, enterprises don’t have a good handle on cloud spend, security, and governance. They need a new way to manage cloud.
Recommendations to improve cloud management
Strategies to manage cloud costs
Practices to address cloud security
Frameworks for cloud operations
Companies now look to cloud to modernize and to grow by leveraging cloud for differentiated business outcomes. They want cloud to help them open new revenue streams, access emerging technologies such as artificial intelligence (AI), and integrate acquisitions. And companies are happy with what cloud enables them to do. Nearly 75% report cloud migration very effective or extremely effective to meet objectives.
Companies have made big commitments to cloud and are committing more. Two-thirds have increased cloud spending this year, and four out of five intend to increase spending in the year ahead. Companies also continue to add new cloud vendors. This will only accelerate as cloud-driven AI and industry solutions continue to emerge.
But as cloud investment races ahead, utilization has not kept pace. Companies have on average utilized 47% of all the cloud they have already committed to, our survey found. This is reflected in the financial reporting of major cloud providers.
The 12 cloud providers in our survey collectively report over $300 billion in corporate cloud commitments that have not been used. A company that does not utilize the cloud it committed to faces only bad outcomes: lose money, spend more to accelerate migration, or renegotiate from a point of weakness.
This new era brings new complexities. In 2023, nearly two-thirds of respondents (65%) use three to four cloud or cloud service providers, a 75% increase over the proportion with three or four providers in 2021. Over half (53%) say they struggle to monitor costs in this environment. And more than one-third of the time, companies silo cloud ownership decisions within business or IT, not both. Finally, more than 40% have lax policies to govern cloud deployment.
These management issues contribute to surprise cloud costs, unseen security threats, and cloud management confusion. As companies adopt more cloud, these management challenges will grow in size and difficulty.
Companies use cloud to grow, and it delivers. As cloud usage expands, companies risk losing cost, security, and management control. The following three steps guide enterprises to better utilize and manage cloud.
