Flexera report highlights cloud cost management challenges for organizations

The 2025 State of the Cloud Report from Flexera indicates that 84% of organizations view managing cloud spending as a primary challenge. As cloud expenditures are anticipated to rise by 28% over the next year, many organizations are adjusting their cost management strategies.

With a notable investment in Artificial Intelligence (AI), one-third of the organizations surveyed report spending over $12 million annually on public cloud services. Many organizations, facing budgets that exceed limits by 17%, are increasingly engaging managed service providers and expanding their FinOps teams to maintain control over cloud costs.

Jay Litkey, Senior Vice President of Cloud and FinOps at Flexera, noted that the rapid expansion of AI investments necessitates fine-tuning cost management to avoid wasted spending. He expects the adoption of AI technologies to accelerate as organizations invest more in this area.

While estimates of wasted cloud spending decline, the use of AI and related public cloud services appears to be increasing, with 76% utilizing data warehouse services to support AI models. The report shows a jump in Generative AI (GenAI) usage, rising from 47% in 2024 to 72% in 2025.

Becky Trevino, Chief Product Officer at Flexera, highlighted the increasing adoption of FinOps as a positive trend, coinciding with decreasing estimates of wasted spending. Identifying effective cost management practices becomes crucial as organizations navigate AI services and their budget impacts.

Key findings from the report include: cloud repatriation is emerging but remains low, with only 21% of workloads moved back to on-premises (on-prem) environments; 57% of organizations are planning sustainability initiatives focused on carbon tracking; cost efficiency is the leading measure of cloud success for 87% of respondents; and 79% of organizations are expanding their cost management strategies to include Software-as-a-Service (SaaS) and software licensing decisions.

Additionally, the report noted ongoing competition between Amazon Web Services (AWS) and Microsoft Azure, with AWS currently leading among small and medium businesses. AWS is reported to serve 53% of SMBs, compared to 29% for Azure, while Google Cloud Platform ranks next with about 46% usage across organizations.