Most IT leaders struggle to prove ROI from cloud spending

CloudBolt Software has released a report indicating that most IT leaders struggle to demonstrate return on investment (ROI) from cloud usage, despite claiming confidence in their organisation's FinOps maturity.

The report, entitled "Performance vs. Perception: The FinOps Execution Gap," was conducted in partnership with Wakefield Research. It surveyed 350 senior IT leaders across various industries in the United States to assess the current state of Financial Operations (FinOps) practices regarding cloud cost management.

The research identifies a notable disconnect between perceived levels of maturity in FinOps practices and the actual operational effectiveness in managing and optimising cloud costs. Although many respondents label their FinOps approaches as mature and automated, a substantial number reveal ongoing challenges in consistently demonstrating the value generated from cloud investments.

According to the findings, 78% of IT leaders admitted to difficulties in consistently showcasing cloud ROI. When asked to define ROI, respondents primarily pointed to revenue growth (43%), followed by operational efficiency and productivity (36%), and cost savings (35%).

The report also found strong acknowledgement of the rising impact of Kubernetes on cloud expenditure. While 98% of participants agree that Kubernetes is becoming a significant driver of cloud spend, 91% admit they are unable to optimise their Kubernetes clusters effectively, identifying a gap in operational capabilities as container adoption increases.

Many organisations report relatively high levels of automation in their cloud operations. The study reveals that 66% of respondents say their environments are mostly or fully automated for cloud waste management and spend optimisation. Despite this, 58% indicate that identifying and remediating cloud-cost waste can still take weeks or months, raising questions about the true extent of automation achieved by these organisations.

Kyle Campos, Chief Technology and Product Officer at CloudBolt, stated: "FinOps as a discipline is more sound than ever and continues to evolve effectively. But a good percentage of organizations may be taking a victory lap before even navigating the first turn. Through this research, it's evident that while a majority indicate they believe they've achieved FinOps maturity, the data shows they are still in the early stages of operationalizing and optimizing FinOps practices. Confidence in lieu of measurable progress obscures reality and hinders the improvement necessary for significant business impact."

When identifying barriers to optimising ROI from cloud investments, 55% of respondents cited difficulty in linking cloud expenditure directly to business outcomes. Other key challenges include organisational misalignment and operational silos (48%), as well as issues related to inefficient resource management, such as poor tagging and inconsistent accountability (44%).

The report also highlights the ongoing relevance of private cloud and data centres in driving ROI, with hybrid multi-cloud management identified as the top priority for 42% of those surveyed. Over the next six to twelve months, 39% of respondents expect hybrid cloud management to be a funded priority, second only to the optimisation of artificial intelligence and machine learning workloads (AI/ML cloud-cost optimisation), which was cited by 40%.

Campos added: "Leaders believe they have visibility into their cloud spend. Yet without necessary governance, enforcement, and effective remediation, they are doing little to reduce the insight-to-action gap – the time it takes to go from 'we have a problem' to 'problem fixed and cost optimized.' This leads to persistent inefficiencies and inflated costs. Kubernetes and AI-driven workloads especially highlight this disconnect – rapid adoption without proper operational control and automated actions (both retrospective and proactive) is dramatically affecting return on investment. If FinOps practices are not focusing on continuous optimization and employing the capabilities to execute on that, organizations will continue to struggle to effectively show cloud ROI."

The full report includes comprehensive data analysis and recommendations, addressing the existing gaps between FinOps perceptions and the realities of cloud operational performance.