The true cost of cloud: Managing rising spend without sacrificing innovation

The on-demand tech paradox

Across industries – from manufacturing and banking to telecom, life sciences, and public services – organizations are embracing on-demand technologies like cloud, SaaS, and Gen AI to drive agility, innovation, and scale. But with this transformation comes a paradox: the faster you scale, the harder it is to control spending.

Capgemini’s latest research report, The on-demand tech paradox, reveals that 82% of executives have seen significant cost increases in cloud, SaaS, and Gen AI. And 61% say these costs are impacting profitability. The promise of innovation is real – but so is financial strain.

The hidden cost spiral

Let’s step into the shoes of a CIO at a global enterprise. Their teams are deploying Gen AI for R&D, SaaS tools for collaboration, and cloud infrastructure for scalability. But soon, finance flags budget overruns, IT struggles with forecasting, and business units are buying tools independently.

This isn’t an isolated case. The report shows:

• 76% of organizations exceeded public cloud budgets (by 10% on average)
• 68% overspent on Gen AI; 52% on SaaS
• 59% say cloud waste is a major challenge
• 58% describe on-demand tech costs as “a big black hole.”

What’s driving the cost explosion?

1. Decentralized tech spend
A significant portion of technology spending is now being driven by business units rather than IT departments. Specifically, 59% of Gen AI and 48% of SaaS expenditures are initiated outside of IT’s control, making it difficult to maintain oversight and governance. Alarmingly, 12% of SaaS spending is completely unmanaged, increasing the risk of redundant purchases and wasted resources.

2. Reactive cost planning
Many organizations are adopting cloud-first strategies without adequate cost planning. In fact, 54% of organizations move to the cloud reactively, only considering costs after deployment. This issue is especially pronounced in sectors like public services (65%) and defense (63%), where cost considerations are often an afterthought rather than a foundational part of the strategy.

3. Underutilized tools and governance gaps
Despite the availability of cloud cost management tools, only 37% of organizations actually act on the insights these tools provide. Most FinOps teams are focused on day-to-day operations rather than strategic cost management, leading to missed opportunities for optimization and value creation.

A wake-up call from the FinOps frontline

J.R. Storment, Executive Director of the FinOps Foundation, offers a sharp reminder:
“Only considering cost after deployment can lead to unwelcome outcomes– surprisingly high cloud bills, lower product margins, and fewer options for optimization” 

This insight reflects a widespread issue: cost planning is often an afterthought, even in sectors with high regulatory and operational complexity. The result? Missed opportunities, budget overruns, and underwhelming ROI.

From cost control to value enablement

Managing cloud economics isn’t just about cutting spend – it’s about unlocking value. Yet only 2% of FinOps teams cover cloud, SaaS, and Gen AI holistically. And just 42% influence business decisions.

To shift from reactive cost control to strategic enablement, organizations must:

• Expand FinOps scope across all on-demand tech
• Embed cost awareness into architecture and development

Align finance, tech, and business on a shared “language of value.”

Five actions to regain control

1. Shift left on cost planning: Bake cost intelligence into early design and architecture decisions.

2. Automate cost controls: Use tools for auto-scaling, idle resource detection, and license decommissioning.

3. Use AI for forecasting and optimization: Spotify uses AI to predict demand and optimize workloads in real time.

4. Build a culture of accountability: Tag costs to teams, implement chargeback models, and foster shared ownership.

5. Measure ROI holistically: Move beyond cost metrics to include innovation, productivity, and sustainability.

Remember: Cost is a proxy for sustainability

53% of executives agree that inefficient on-demand tech usage leads to excessive energy consumption and carbon emissions. Sustainable FinOps – where cost and carbon efficiency go hand-in-hand – is the next frontier.

Download the full report

The Capgemini Research Institute’s on-demand tech economics report offers a roadmap to navigate this paradox – backed by data from 1,000 global executives and insights from industry leaders. Download now and discover how to shift from reactive cost control to strategic value enablement.