New Tangoe Report Finds Cloud Costs and Complexity Undercutting Vital Benefits

The complexity of multi-cloud infrastructure and software environments may be overshadowing the intended innovation benefits of cloud services, according to a new report published today by Tangoe. While over 82% of businesses plan to increase investments in software-as-a-service (SaaS), infrastructure-as-a-service (IaaS), and unified communications-as-a-service (UCaaS), 80% see costs as a primary challenge with their existing implementations.

“There’s a very real cloud cost quandary going on,” said Chris Ortbals, chief product officer for Tangoe. “Organizations are not always good at buying exactly what they need, using everything they pay for, and carving out the time or an AI-powered process for governing cloud use. All of this leads to wasted resources and overspending. Responsibly managing the cloud requires achieving strong visibility and making sense of expansive data sets to realize the most value.”

To better understand challenges associated with cloud service management, Tangoe partnered with CIO magazine and Foundry in January 2023 to survey 200 IT decision makers (ITDMs) at large enterprises (with an average number of 6855 employees). In addition to cost control, the study uncovered security, shadow IT, and cloud waste among top business challenges thwarting innovation expectations. Read the full 2023 Cloud Report and view the infographic. Key findings of the study include:

Too many clouds to manage – Companies report using dozens of different clouds to realize savings versus on-premises deployments. The average company uses 14 SaaS applications, 11 UCaaS platforms, and nine IaaS clouds with 39% using public cloud, 31% using private cloud, and 30% using hybrid cloud. Larger organizations with loftier deployments face the steepest challenges managing multi-cloud services.

Great unmet expectations – According to the research, the cloud is falling short of realizing expectations. Less than half of UCaaS and IaaS investments have fully delivered anticipated benefits, such as cost savings and ease of management.

Shadow IT fogs the view – Seventy percent of respondents reported Shadow IT as their top challenge with cloud applications. Given today’s hybrid workforce, there is an eye-opening number of unsanctioned tools, multiple redundant SaaS subscriptions, and a significant amount of application licenses that need to be reassigned to new owners. 

Wasted resources weigh down savings – When it is difficult to discern cloud usage and spending it is that much harder to optimize cloud resources and reap cost savings. The research revealed that digital transformation dollars are being washed away with 29% of cloud resources going unused or underutilized in terms of monthly cloud licenses. 

Bigger organizations, higher hurdles – Larger organizations (greater than $5 billion in revenue) are much more likely to experience severe challenges with existing cloud deployments such as security, costs, ease of management, and performance improvements. In fact, 68% of larger companies faced significant difficulty achieving cost savings with the cloud, compared to 36% of smaller companies.

IT wish list – In addition to challenges, the study found that nearly all (98%) of IT leaders would benefit from a single expense and asset management platform to compare costs and evaluate how effectively they are using each service. Sixty-one percent identified cloud optimization and right sizing among their most important cloud management requirements.

“Tackling these challenges requires more artificial intelligence than meets the human eye,” said Ortbals. “Especially for IT teams being tasked to do more with less, automation can play a critical role in gaining greater visibility and smarter management to optimize cloud investments.”