“GenAI is creating a cloud boom that will take IT expenditures to new heights,” said Chris Ortbals, chief product officer at Tangoe. “With year-over-year cloud spending up 30%, we’re seeing the financial fallout of AI demands. Left unmanaged, GenAI has the potential to make innovation financially unsustainable.”

The study surveyed 500 IT and finance professionals across a wide range of business sizes and industries with the overwhelming majority (92%) reporting their cloud spending was on the rise. The top three reasons were listed as AI (50%), GenAI (49%) and automation (36%). On average, companies spend $40M on cloud services with a surprisingly even split among categories: SaaS (28%), private cloud (28%), IaaS (25%), and UCaaS (19%).

Key Challenges in Private Clouds, Software, Cost Allocations

The findings also spotlight the complexity of cloud financial management, highlighting specific challenge areas.

• Hybrid Cloud Cost Management is Rising in Criticality: 80% say private cloud cost management is tricky compared to public, yet 95% plan to repatriate their resources from public to private clouds with 47% of resources slated for repatriation.
• Software is a Key Contributor to Overspending: 38% of SaaS spending comes from Shadow IT, and 67% admit their productivity software licenses (like Microsoft 365® and Google® Workspace) go to waste.
• Sharing Cloud Expenses is Important but Difficult: 93% agree shared cloud expenses should be allocated across the organization, and yet, 53% find chargebacks challenging and time consuming.

Preparing Companies to Handle Rising Cloud Expenditures

In addition to putting context around the challenges associated with cloud financial management, the study also reveals the best practices helping accelerate results.

• FinOps Coverage Has to Expand: A decisive 94% of cloud cost practitioners assert that FinOps must evolve to incorporate SaaS, and not just focus on Infrastructure as a Service (IaaS). Learn how Tangoe’s FinOps solution helped a manufacturer reduce Microsoft 365 spending.
• More than Cost Cutting – It’s about Productivity and Security: 94% of respondents consider increased productivity a derived value of cloud cost management. Enhancing productivity and security have emerged among the top three benefits of effective cost management, highlighting the need for FinOps solutions that do more than just pinpoint ways to save but also advance financial operations and risk management practices.
• Popular Approaches Leave Leaders Worried: In controlling spending, a collective 62% of respondents use either manual processes (21%) or native tools from cloud service providers (42%), rather than adopting specialized FinOps software. These approaches correspond with a lack of confidence and higher concerns that costs will spiral out of control.

“The cloud’s hidden costs and unpredictable invoices can become the silent killer of GenAI,” added Ortbals. “The more urgently companies adopt comprehensive cost management FinOps strategies, the easier it is for them to turn GenAI’s promise into lasting innovation instead of runaway expenses and technical debt.”

To review the Tangoe report: “State of Cloud: The Critical Role of Third-Party FinOps in Cloud Spending Control”, visit the website here.

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The post Generative AI Driving YOY Cloud Spending 30% Higher appeared first on Digital IT News.

The study surveyed 500 IT and finance decision-makers from the US and the UK to explore their IT expense management practices. The research explored three approaches to IT expense management: fully in-house, fully external (third-party solution), and hybrid (a mixture of in-house and external solutions). Read the research report.

“As sprawling technologies and inflation consume larger proportions of corporate IT budgets, business leaders are growing increasingly concerned about their ability to sustainably innovate, including tracking spending, governing expenses, and stretching their IT budgets,” said Becky Carr, chief marketing officer at Tangoe. “FinOps programs mature quickly and yield faster time to insights and savings when leveraging a managed solution.”

ITEM Required for GenAI Success

Cloud infrastructure has been dominating IT spending trends due to recent accelerations in digital transformation and because it serves as the underlying enabler for AI innovation and new GenAI platforms. As the data reveals, financial management is central in safeguarding business continuity and innovation performance, especially when cloud spending will soon drain +50% of IT budgets and is only expected to grow with increasing GenAI adoption.

“AI can trigger unpredictable cloud costs, which is why ITEM software and services are being used to ensure innovation doesn’t drive a hidden layer of technical debt,” said Carr.

The findings spotlight the complexity of IT financial management and what’s at risk without it:

• When it comes to tech sprawl there’s no end in sight. Respondents predict double-digit spending increases over the next couple of years with cloud infrastructure (20%) and software (16%) investments leading the way. Additional investments in mobile and telecom technologies aren’t far behind.
• Business continuity and operational performance are at stake. Late payments cause 85% of organizations to experience outages in their cloud, mobile, and telecom services.
• Managing services and expenses is growing increasingly complex. On average organizations handle 39 IT service providers with 60-80 employees involved in overseeing them.
• Data analytics are among the top three challenges for in-house ITEM programs. Given the growing number of cloud applications and mobile devices in use today most companies can’t get past the first, most basic phase – applying advanced analytics and turning data into actionable insights.

The Value of a Fully Managed Service

In addition to putting context around the urgency and challenges associated with financial management, the study also reveals the advantage of using a fully managed service for IT expense management:

• Businesses with either a fully outsourced or hybrid solution experience process efficiency and productivity gains (90%), faster time to business insights (88%), and faster time to cost savings (88%).
• Only 66% of in-house programs deliver results within the first month, while 81% of fully outsourced solutions deliver results within the same timeframe.
• Ninety-four percent (94%) of organizations using a third-party to manage IT expenses, also have a dedicated FinOps practice. Additionally, having a FinOps program leads to 20-28% lower spending across cloud infrastructure and cloud software.

The faster a company can find new ways to save and capitalize on those opportunities, the more money it can save to offset the cost of an ITEM service or reinvest into overstretched IT budgets. Eliminating manual processes and ingesting information with AI automation are essential to reducing the administrative work of data compilation and speeding up the time to savings. Fully managed services can make a meaningful difference by helping clients both find opportunities and act on them.

Learn more about Tangoe’s IT Expense Management (ITEM) solutions at the website here.

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The post IT Expense Management Costs 5X Less When Fully Outsourced appeared first on Digital IT News.

The post Tangoe Announces New AI Patented Capabilities in FinOps appeared first on Digital IT News.