The paradox of on-demand technology: cloud and AI innovation paid for by rising costs and chaos

Companies around the world are aggressively investing in on-demand technologies such as the public cloud, software as a service (SaaS) and generative artificial intelligence. The aim is to accelerate innovation and maintain competitive advantage.

But a new global report from Capgemini Research Institute, based on a survey of 1,000 managers from organisations with revenues of more than US$1bn, reveals a hard truth: rising costs, complexity and lack of oversight are beginning to threaten the viability of these critical investments.

A surge in investment and expectations

The transformation towards consumer models is a reality. According to the report, the share of on-demand technology in IT budgets is set to increase from the current 29% to 41% over the next year.

For the majority of business leaders (77%), the scalability and performance of the cloud is the foundation for growth, enabling faster time to market. Nevertheless, behind this enthusiasm lie significant operational and financial challenges.

The hidden costs of digital transformation

The Capgemini study identifies key problem areas that undermine the benefits of flexible technology models.

• Uncontrolled cost growth: As many as 82% of executives surveyed report significant increases in spending on cloud, SaaS and Gen AI. The problem is not only price increases, but also notorious budget overruns. 76% of organisations spent more on the public cloud than they anticipated (by an average of 10%), and similar problems affected budgets for Gen AI (68%) and SaaS (52%). The main reasons were inefficient use of resources and decentralised, uncontrolled purchasing.
• IT in the shadows and security risks: Purchasing decisions are increasingly being made outside IT departments. Business units already account for 59% of spend on generative AI and 48% on SaaS. What’s more, an estimated 12% of all software-as-a-service spending remains completely outside any form of governance. Almost all managers (98%) admit that they make technology purchases bypassing the IT department, leading to inefficiencies, duplication of tools and the creation of security vulnerabilities.
• Disappointing return on investment: Despite the huge financial outlay, the real benefits often remain below expectations. Only 29% of companies achieved the anticipated cost savings from SaaS implementations. Similarly, only 33% achieved the desired quality of cloud services and 38% saw the expected acceleration of innovation through generative artificial intelligence.

FinOps: a theoretical solution, immature in practice

The answer to cloud cost management chaos is supposed to be the discipline of FinOps. And while 76% of organisations have or plan to implement dedicated teams in this area, their approach is still in its infancy.

Most companies focus on basic cost monitoring tools, but only 37% regularly analyse this data and take optimisation measures based on it.

Most symptomatically, only 2% of FinOps teams manage cloud, SaaS and Gen AI costs in an integrated way. This shows that FinOps is still seen as an operational tool, rather than a strategic function influencing business decisions.

Sustainability: the forgotten dimension of optimisation

Inefficient management of on-demand technologies also has an environmental dimension. More than half of companies (53%) agree that sub-optimal use of resources leads to excessive energy consumption and increased carbon emissions.

Despite this awareness, only 36% have a strategy that integrates sustainability goals with financial operations. Optimising resources, switching off unused instances or designing energy-efficient architectures are actions that can bring both financial and environmental benefits.

The paradox of on-demand technology is that tools created to increase agility and efficiency, without proper oversight, become a source of chaos and unpredictable costs. The data clearly shows that the way to realise their full potential is through mature, integrated financial, security and sustainability management.