The vision of the cloud as a cost-efficient solution captured the imagination of IT leaders during its years of mass adoption. Enterprises expected to save significantly by leveraging the scalability of public cloud infrastructure and paying only for the resources they used. However, as reflected in the 2025 Crayon IT Cost Optimization Report, the reality has been far more complex.

The report, based on insights from more than 2,000 IT leaders, reveals that a staggering 94% of global IT leaders struggle with cloud cost optimization. Many enterprises underestimate the complexities of managing public cloud resources and the inadvertent overspending that occurs from mismanagement, overprovisioning, or a lack of visibility into resource usage.

This inefficiency goes beyond just missteps in cloud adoption. It also highlights how difficult it is to align IT cost optimization with broader business objectives. More than half (57%) of survey participants in the Crayon Report pointed to cloud cost optimization as their top lever for maximizing IT spending. This growing focus sheds light on the rising importance of finops (financial operations), a practice aimed at bringing greater financial accountability to cloud spending.

Adding to this complexity is the increasing adoption of artificial intelligence and automation tools. These technologies drive innovation, but they come with significant associated costs. According to the Crayon Report, 40% of IT leaders anticipate that managing AI-related expenses will be their biggest financial challenge within the next three years. This underscores the need for robust cost-optimization strategies if enterprises are to sustain growth without breaking their budgets.

The move toward hybrid models

One of the most revealing insights from the Crayon Report is the growing interest in hybrid IT infrastructures, where enterprises balance workloads between public clouds and on-premises environments. A massive 94% of IT leaders surveyed expressed a willingness to invest in on-premises infrastructure, with plans to allocate approximately 37% of their IT budgets to these efforts. The primary factor driving this shift is cost. Many organizations have found that on-premises infrastructure is cheaper for hosting certain workloads, notably those with predictable resource requirements where cloud elasticity is less advantageous.

In addition to cost, data security and compliance were cited by 52% of respondents as another key reason for this hybrid shift. With increasing regulations requiring tighter control over data handling (especially in industries like healthcare and finance), hosting critical data on premises provides enterprises with an edge in compliance management while avoiding some cloud-associated costs.

Control over infrastructure was mentioned by 41% of IT leaders. The argument for greater control is not new, but it has gained renewed relevance when paired with cost optimization strategies. Simply put, enterprises are asking tough questions about whether the public cloud meets all their operational needs. For an increasing number of organizations, the answer is no.

AI spending on the cloud

Most AI deployments illustrate the challenges with public cloud costs. According to the Crayon Report, 60% of enterprises use AI to optimize IT process automation, while 45% deploy AI for predictive cost analytics. This move underscores how businesses are leaning on machine learning models to improve resource planning and forecasting. However, running AI workloads at scale in the cloud is expensive, especially for organizations that utilize large computational models or require GPUs for specialized tasks.

Public cloud providers such as AWS, Microsoft Azure, and Google Cloud have responded with AI-optimized services and product offerings, but those often come with hefty price tags. The synergy between AI and cloud has clearly driven massive innovation, but it has also made it harder to manage cloud spending effectively. This is why cloud optimization strategies that cut costs without sacrificing performance are now crucial for maintaining financial stability amid increasing technological complexity.

The future of cloud optimization

With 41% of respondents’ IT budgets still being directed to scaling cloud capabilities, it’s clear that the public cloud will remain a cornerstone of enterprise IT in the foreseeable future. Cloud services such as AI-powered automation remain integral to transformative business strategies, and public cloud infrastructure is still the preferred environment for dynamic, highly scalable workloads. Enterprises will need to make cloud deployments truly cost-effective. This means:

• Streamlining multicloud strategies. Many organizations continue to adopt a multicloud approach in pursuit of reliability and flexibility. However, managing multiple cloud platforms often leads to redundant costs. IT leaders need effective governance models that optimize resource usage across all cloud providers.
• Investing in finops. To gain tighter financial oversight and accountability in managing cloud resources, enterprises should look for tools that can provide granular visibility into cloud spending and identify opportunities to cut costs.
• Adopting a workload-first strategy. Instead of migrating workloads en masse to the cloud, organizations must critically evaluate which workloads are most cost-effective to run in the public cloud versus in their on-premises infrastructure.

The core benefits that once made the cloud so appealing—scalability, flexibility, and efficiency—still hold value today. However, experience has taught enterprises a tough lesson: Public cloud adoption alone does not guarantee cost savings. Organizations now find themselves in a new phase of their cloud journeys; the focus has shifted from migration to optimization and hybridization. IT leaders must view their decisions not as binary choices between public cloud or on-premises environments, but as opportunities to strike an efficient balance between the two.

By adopting strategies that prioritize smart cloud spending, businesses can continue to leverage the power of the cloud without sacrificing their financial health. The era of cloud optimization and hybrid IT has only just begun.