Forrester: IT departments are blowing their cloud budgets

The latest research from Boomi, conducted by Forrester, has reported that IT leaders expect their cloud costs will exceed budgets. The analyst firm has forecast that public cloud spending will hit more than $1tn globally by 2026.

In a survey of 420 IT decision-makers, Forrester found that IT leaders are concerned that cloud workloads and costs will grow even more rapidly over the next two years and expect cloud workloads and costs to continue increasing more quickly over the next two years.

Nearly three in four (72%) of the IT decision-makers polled reported that their company exceeded its set cloud budget in the most recent fiscal year. Among the areas experiencing an acceleration of cloud deployments are: applications/workloads in IT operations (54%); hybrid work (50%); software development platforms and tools (45%); and digital experiences (44%).

The survey found that perennial problems such as excessive storage and the overconsumption of network bandwidth contribute to an increase in costs. However, Forrester also found that a lack of integration strategy and efficient cloud architectures is also to blame for rising cloud costs. The survey showed that over half (52%) of IT decision-makers polled say excessive storage is driving up cloud costs. Overuse of network bandwidth was the reason for increased costs given by 42% of those polled, while 44% had lack of integration as a criteria driving up their cloud costs.

The survey reported that 41% of the IT decision-makers polled admit that they are not able to build cost governance in their cloud infrastructure. According to Forrester and Boomi, IT leaders are beginning to see both architecture and integration as part of the cloud cost equation. The findings have been published in a new report, Cloud costs are out of control: integration And modernization can help rein them in.

Forrester and Boomi note that emerging FinOps practices are not spared the challenges associated with reactive cloud cost remediation strategies.

“By focusing too much on managing costs only after they’ve ballooned out of control, organisations lose the opportunity to proactively control costs before they become a problem,” the authors of the Cloud costs are out of control report said.

The report states: “As the role of FinOps in cloud cost management has expanded, more teams and functions within the organisation have increasing responsibility for cloud costs, yet many decision-makers report that visibility into these costs across roles remains elusive today. A lack of cloud architecture that supports cost containment at the integration level also prevents leaders from advancing their FinOps.”

The survey also found that 72% of decision-makers believe that cloud architecture integration and modernisation initiatives have the potential to transform their company’s ability to reduce cloud spend.

According to the report’s authors, as a result of current integration and modernisation initiatives, decision-makers are already experiencing improved cloud spend governance, more effective cost management, the elimination of redundant data flows via prebuilt integrations, and the ability to use generative AI to improve app integration efficiency. 

Forrester and Boomi note that the findings of the survey show that cloud architecture integration and modernisation initiatives lead to more effective cross-team collaboration, better FinOps enablement, and the ability to shift resources toward innovation, such as fast-tracking generative AI language model adoption.

“We believe the findings are a clear example of integration being left out of the cloud cost equation,” said Ed Macosky, chief product and technology officer at Boomi. “When systems are disconnected and data is siloed, companies are only seeing part of their organisations’ cloud cost picture, and this lack of visibility impacts tracking and decision-making.”