Capgemini report notes challenges in On-Demand technology spending

A recent report from the Capgemini Research Institute indicates a rising dependency on On-Demand technologies, such as public cloud services, Software-as-a-Service (SaaS), and Generative AI (GenAI). This shift is recognized as vital for enhancing organizational agility and competitiveness, though challenges related to increasing costs and operational complexities are also noted.

Key Findings

The report indicates that around 80% of organizations view public cloud, SaaS, and GenAI as fundamental for growth. However, cost management has become problematic, with three-quarters of organizations exceeding their public cloud budgets by an average of 10%. Additionally, 68% reported overspending in GenAI, and 52% in SaaS, primarily due to insufficient cost visibility and resource underutilization.

Leadership Insights

Karine Brunet, CEO of Cloud Infrastructure Services at Capgemini, commented, “The surge of On-Demand technologies has reshaped how leading businesses operate. While costs are projected to double over the next few years, organizations must achieve better transparency and control over expenses.” She highlighted the importance of aligning cloud strategies with overall business objectives to extract value and manage complexities.

Challenges for Organizations

Organizations that have advanced in adopting On-Demand technologies report benefits such as cost savings and faster innovation, whereas those less mature encounter issues like overspending and shadow IT concerns. The report notes that only 29% of organizations achieved anticipated savings from their SaaS investments.

The Need for Financial Management Frameworks

To mitigate the identified challenges, implementing effective Financial Operations (FinOps) frameworks is essential. As of now, only 37% of organizations assess the effectiveness of their cloud cost management tools. Despite 76% planning to establish FinOps teams, many of these organizations lack comprehensive coverage across all technology segments.

Conclusion

The findings emphasize that while On-Demand technologies are increasingly important in IT expenditure, organizations must enhance their cost management practices and governance to fully optimize investments and ensure alignment with strategic goals.