The Flexera 2025 State of the Cloud Report reveals that enterprises are increasingly leveraging FinOps to manage costs amid continued cloud growth, with some workloads repatriated to on-premises environments. Key attention is being directed towards AI, software licensing, and cloud sustainability. AWS and Azure remain neck-and-neck in the cloud provider dominance battle.
Key Findings and Trends:
- Cloud Adoption: Over half of enterprise and SMB workloads run in public clouds, with ongoing migration and new cloud workloads driving continued growth. Only 21% of cloud workloads have been repatriated.
- Cost Management: Cloud spend is projected to rise by 28% in the next year, with organizations exceeding budgets by 17%. FinOps teams are expanding to recapture 27% of wasted cloud spend. Over half of organizations (60%) use Managed Service Providers (MSPs) for public cloud management.
- Challenges: Managing cloud spend (84%) and security (77%) are the top cloud challenges. Organizations struggle with controlling growing cloud spend, with estimated wasted cloud spend on IaaS and PaaS at 27%.
- Cloud Strategies: 70% of respondents embrace hybrid cloud strategies, using at least one public and one private cloud. Large enterprises utilize multi-cloud tools more than smaller organizations.
- Public Cloud Adoption: Public cloud adoption continues to accelerate, with 33% of organizations spending more than $12 million annually on public cloud. SaaS expenses remained consistent year over year.
- AI and PaaS: Adoption of AI-related public cloud services is exploding, with 79% of organizations using or experimenting with AI and machine learning (ML) PaaS services. Generative AI (GenAI) usage has surged, with 72% of organizations using it either extensively or sparingly.
- Cloud Providers: AWS and Azure continue to compete for the top spot, with Azure slightly edging out AWS in some adoption tiers. Google Cloud Platform holds the third spot, with nearly half of organizations running some or significant workloads on it.
- Sustainability: Over a third of organizations (36%) are tracking their cloud carbon footprint, with this figure expected to increase. Sustainability initiatives are growing, with 57% of organizations expecting to have a defined sustainability initiative in place within the next year.
- European Insights: European organizations have a similar distribution of cloud usage compared to the global pool, with a skew towards enterprises. IT/Ops professionals represent the highest percentage of respondents, and FinOps team usage has increased significantly. European organizations are more likely to have defined sustainability initiatives than North American counterparts.
Conclusion:
Organizations are embracing a centralized approach to the cloud, with the presence of cloud centers of excellence (CCOE) and FinOps teams on the rise. While cloud adoption continues to evolve, the focus remains on optimizing cloud costs, managing security, and leveraging emerging technologies like AI and GenAI. Sustainability initiatives are gaining traction, with organizations increasingly prioritizing carbon footprint tracking and green cloud practices.
