Cloud service expenses 30% higher than in 2021, analysis says

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End-user spending on cloud services has risen by approximately 30% in 2023 compared to 2021, globally, despite a diverse range of offerings, according to an analysis by a local branch of a pre-owned software broker in Central and Eastern Europe. The company also highlights that around the same percentage, 30%, represents unnecessary expenses on these services, as organizations struggle to accurately identify their storage space needs and other features offered by the cloud.

In 2021, the total value of public cloud service expenses for end-users reached about 392 billion euros globally. This year, data indicates a total of 562 billion euros, with the majority being allocated to Software as a Service (SaaS) services, accounting for 33%. Starting from April 2022, some of the major cloud service providers increased their prices by percentages ranging between 10% and 15%.

“In an unpredictable economic context, where inflation remains high and companies are looking to cut costs to avoid financial troubles, IT prospects are less promising than previously anticipated. Clients face price hikes related to cloud usage, but there are solutions that can reduce these costs for organizations by up to 40% over a five-year period,” says Ionut Les, Country Manager for Romania at Forscope.

Cloud services often include a wide range of tools and functions that are not fully utilized, yet still need to be paid for. These are a fixed part of the package and are typically presented as a justification for a higher subscription cost. While they might be essential for some high-volume data users, most companies do not maximize the product’s value, and operational expenses gradually increase without any tangible positive effect on employee performance.

In such cases, the optimal decision is the implementation of a hybrid solution for users who don’t require high power; namely a mix of subscription-based cloud services and perpetual software on-site. This allows organizations to adjust their software expenses (and sometimes even hardware), while still obtaining all the features and services needed to carry out their operations.

“Costly subscriptions can be limited only to users who truly need them, and the rest of the employees can work with the same tools as before, but at a significantly reduced expense for the organization. The better a company can control its cloud expenses, the more funds it will have available to hire a software engineer, for instance, to develop a new product or to tap into a new market segment,” points out Ionut Les.

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