Flexera has announced the release of its 2025 State of the Cloud Report. The 14th annual report, which polled more than 750 technical professionals and executive leaders worldwide who were involved in the use of cloud, uncovered that 84% of respondents believe that managing cloud spend is the top cloud challenge for organizations today. With cloud spend expected to increase by 28% in the coming year, the report findings suggest that many respondents are rethinking their existing cloud cost management strategies.
As organizations continue to invest in artificial intelligence (AI), nearly one-third (33%) of organizations are spending more than $12 million annually on the public cloud alone. With cloud budgets already exceeding limits by 17%, organizations are increasingly turning to managed service providers (60%) and expanding use of their FinOps teams to regain control over spending (59%). In fact, the number of respondents that use, or plan to use, a FinOps team increased by eight percentage points year over year.
“AI is in its prime with no indication of losing momentum,” said Jay Litkey, Senior Vice President of Cloud and FinOps at Flexera and Governing Board Member at the FinOps Foundation. “I suspect we’ll see further acceleration of AI use as more organizations embrace their own AI investments and technology vendors introduce agentic AI into their existing toolsets. To stay on budget and accurately forecast for future needs, organizations need to fine-tune how to track and manage their cloud spend and use with FinOps now—or risk a significantly wasted investment.”
While estimated wasted cloud spend is falling, the adoption of AI-related public cloud services is rising. In addition to an increase in the use of data warehouse services (76%), often leveraged to feed AI models, generative AI (GenAI) public cloud services use is booming with 72% of organizations reportedly using the technology either extensively or sparingly, as compared to 47% in 2024.
“FinOps is taking center stage as many enterprises prepare for the onslaught of AI services to eat away at their cloud resources and budgets,” said Becky Trevino, Chief Product Officer at Flexera. “As we’re witnessing an increase in FinOps adoption, we’re simultaneously seeing estimated wasted cloud spend trending downward. This illustrates the power and promise of FinOps practices, proving it is a winning strategy for organizations worldwide.”
Additional key findings include:
- Cloud repatriation is starting to slowly unfold. Today, analysts and experts have indicated that some organizations are moving their workloads back to non-cloud environments (their own data centers and/or co-located/hosted environments). While this is beginning to happen, only a minority (21%) of cloud workloads have been repatriated. However, the ongoing migration to the cloud and net-new cloud workloads outstrip these cloud exits, resulting in continued cloud growth.
- Cloud sustainability initiatives are becoming top-of-mind. Organizations are highly focused on fine-tuning their sustainability practices. Over half (57%) of respondents reported they have, or plan to have, a defined sustainability initiative in place within twelve months, including carbon footprint tracking of cloud use. Regardless, saving money is still top of mind given 57% said cost optimization takes priority over sustainability.
- Cost efficiency continues to be the shining metric. Eighty-seven percent of respondents indicated that cost efficiency/savings is the number one metric used for assessing progress against cloud goals for the sixth year in a row, a 22-point increase from 2024. Organizations are also focused on the volume of workloads migrated (up from 36% in 2024 to 78% in 2025), and cost avoidance, which saw an uptick from 28% to 64%. This continues to validate the narrative that more workloads are moving to—or being developed in—the cloud, making a case for increased cost optimization tools.
- Organizations are extending the scope of cloud costs to SaaS and software licensing. Those responsible for managing cloud use and costs are increasingly expanding their world beyond public cloud (IaaS/PaaS) to more effectively balance costs, usage and future spend. Seventy-nine percent of respondents indicated that they are now involved in cloud software decisions, with 69% involved in managing use and/or cost of SaaS applications and 64% are managing the use and/or costs of cloud licenses (or software running in the cloud).
- Amazon Web Services (AWS) and Microsoft Azure competition remains heated. According to those surveyed, AWS and Azure continue to compete for the top spot regarding public cloud adoption. Recent data shows that AWS maintains a lead among SMBs—53% of SMBs reportedly use AWS, compared to 29% leveraging Azure. Google Cloud Platform holds the third spot, with just under half (46%) of all organizations running some or significant workloads on it.
