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The promise of the cloud was efficiency at scale — and not just build efficiency, but cost-efficiency, too. But throughout the 2010s, we saw organizations fall in love with the build potential of the cloud, racing each other to scale without much concern for their cloud bills.

The results: a trajectory toward $1 trillion in global annual cloud spend, a third of which goes to waste. If the trends continue, that means we’ll see more than $300 billion of wasted cloud spend by 2028. That’s more than $34 million wasted per hour.

That volume of waste is frightening enough, but scarier yet is investors’ shift from growth to profitability.

Throughout 2022, as markets have seen prolonged contractions for the first time in over a decade, investors have begun weighting profitability more heavily than growth in company valuations. The more companies spend on the cloud with no ROI, the more it eats into their profitability and slashes their valuations.

Why is so much cloud spend wasted?

Organizations have not been blind to the issue of cloud waste — they’ve just taken a limited approach to managing it. Most have focused on optimization: reducing their overall cloud spend through provider savings plans, reservations, and usage discounts.

But calling it “optimization” is a little misleading. Yes, employing these methods can lop off a percentage of your cloud bill — but what if you’re paying for inefficient cloud resources? What if one of your customers is costing you more money than all the rest? What if one of your freemium features is racking up more than its share of compute spend?

Optimization can’t answer deeper questions about inefficiencies like these — it can only make them cost a little less. But as you scale, these inefficiencies only become more pronounced, and no level of “optimization” can make them cost-efficient.

The age of optimization-only cloud cost management is drawing to a close. To curb exponential cloud waste, turn cloud bills from ciphers into skeleton keys, and unlock profitability, organizations must transition to cloud cost intelligence.