Section 1
Cloud powers new technologies, but modernization is a must
Most business executives see cloud and IT as revenue drivers
of business executives view cloud and IT as profit centers.
is the average cloud budget for 2025.
way to unlock technology budgets — say business executives — is by reducing infrastructure complexity.
of organizations plan to increase cloud investments in 2025.
of organizations will increase generative AI investment despite only 45% feeling very satisfied with current ROI.
Laurent BellanChief Technology and Process Optimization OfficerEurostar
Cloud optimization and automation help organizations drive innovation, scalability and competitive advantage by streamlining processes and enhancing operational efficiency.
However, organizations struggle to prioritize their budgets, and investments often miss the mark. Business and IT executives need better alignment to build the right foundations for new technologies.
Cloud computing gives organizations the flexibility, efficiency and competitive advantage they need. “We’ve been cloud-based for about 10 years,” says Laurent Bellan, chief technology and process optimization officer at Eurostar. “Some of the benefits we’ve seen are the speed at which we can operate, especially in the software development space — it’s incredible. It’s also robust and resilient. The number of outages we experience is minuscule, and we recover much faster.”
This performance boost helps to deliver business executives' four most important business drivers for cloud strategy:
1. Deploy generative AI more quickly2. Improve employee experience3. Strengthen cybersecurity4. Enhance supply chain management
The vast majority of business executives in our survey (82%) see cloud and IT as profit centers, and they are investing accordingly. The average cloud budget for 2025 is $160 million, and 76% of organizations say the budget will increase in the next 12 months.
U.S. and European organizations are spending the most out of the three global regions: The average cloud spend in 2025 is $164 million and $163 million, respectively. In APAC, this figure falls to $125 million.
Cloud strategies aren’t one-size-fits-all. From revenue growth in retail to cybersecurity in transportation, the range of business priorities highlights how versatile cloud can be — but it also demonstrates the importance of defining a clear strategic goal to maximize opportunities and drive innovation.
Q. What are the top five business drivers for your organization's cloud strategy? (Number one business driver)
Of the nine different cloud platforms or environments included in our survey, respondents use — on average — a complex mix of seven distinct types of cloud. Private cloud is the most used platform by mainstream organizations, followed by public cloud and edge cloud (Figure 2).
Innovation Leaders, however, are modernizing their cloud architectures to support business innovation goals. They have the same complexity but focus on the right architecture for each use case. For example, they are more likely to use hybrid cloud, which suggests they are optimizing across cloud environments and vendors, while edge and community clouds enable real-time processing and better security and compliance (Figure 2).
Figure 2:Innovation Leaders are adopting modern cloud platforms that support innovation
Q: Approximately how many of each distinct cloud platform or environment does your organization actively use? (Summary of those who use one or more of each platform type)
In mainstream organizations, complexity tends to be less strategic. According to business executives, reducing infrastructure complexity (for instance, by consolidating cloud services or optimizing service locations) is the number one IT improvement to unlock funds for new technology investments in the coming year (37% say this). Yet, just 25% of IT executives share this view. This gap suggests a missed opportunity: More strategic cloud decisions could provide IT teams with additional budget and help them reach their goals more quickly (Figure 3).
Figure 3:Reducing infrastructure complexity can free up budget for new technology investment
Q: Which of the following IT infrastructure improvement measures are most likely to unlock the budget for new technology investment in the next 12 months? (Top four entries for business executives)
Innovation Leaders' top focus is on industry cloud platforms (ICPs). These customized cloud solutions are built for specific industries and provide more specialized services and features than general-purpose cloud platforms. Some 36% of Innovation Leaders prioritize ICPs, and more than three-quarters (82%) invest 6% or more of their IT budget in them.
Enhancing data management and improving automation ranked as the second-most popular options, indicating that Innovation Leaders are focusing on improving how they manage and use data (Figure 4).
Figure 4:Innovation Leaders are focusing on ICPs and data capabilities to free up budget
Q: Which of the following IT infrastructure improvement measures are most likely to unlock the budget for new technology investment in the next 12 months? (Top four entries for Innovation Leaders)
For Innovation Leaders, rebalancing systems to on-premises or private cloud systems is the third-most important way to free up budget for technology investment (Figure 4).
According to Dirk Olufs, chief information officer at DHL Express, executives must rebalance workloads across cloud environments to improve performance, reduce costs and enhance security and compliance: “Organizations must take a pragmatic approach to cloud modernization and see where a particular use case or application makes sense." Olufs points to the DHL Express team’s “adaptive cloud modernization strategy,” which leverages the public cloud for agility and scalability and on-premises systems where data sensitivity is critical.
Mainstream organizations see the value of rebalancing systems but struggle to identify and prioritize this against other urgent needs. Their next two most prominent cloud challenges are difficulties identifying or managing sovereign cloud solutions and concerns about regulatory, ethical or industry compliance.
Dirk OlufsCIODHL Express
Less than half of business executives say they have been very satisfied with the ROI on cloud, automation and generative AI over the past 12 months. European organizations are most likely to be satisfied with cloud ROI: 46% say this, compared with 42% of U.S. organizations and just 33% of APAC organizations.
Despite this underperformance, at least three-quarters of organizations will increase their investments in these technologies in the coming year (Figure 5).
According to DHL Express' Dirk Olufs, organizations must make sure they are allocating budget in a targeted way before committing to an investment. “It’s a question of prioritization and value. The value definitions are moving quite significantly from internal value — that is, technical-driven value such as tech refreshers — to outcomes that support revenue acceleration such as more efficient processes,” he explains.
Figure 5:Organizations plan to invest more despite disappointing ROI
Q: How satisfied have you been with the ROI for the following technologies over the last 12 months? (Very satisfied)Q: How do you see your investment (money or resources) in the following technology areas changing in the next 12 months? (Increased Investments 1%-10%)
Although organizations plan to invest more in these technologies, IT executives overwhelmingly say that their current IT infrastructure cannot support or maximize the potential of emerging technologies.
IT executives must properly manage the expectations of business executives — the budget holders — to make sure they do not succumb to pressure and make technology investments that are premature or misaligned with organizational priorities and capabilities.
Figure 6:IT executives must educate business executives about infrastructure capabilities to prevent wasted investments
Q: To what extent is your current IT infrastructure capable of supporting and maximizing the potential of the following emerging technologies? (Mostly to fully capable)
The top challenge for organizations when it comes to the cloud is building the organizational momentum to rebalance the majority of applications back to an on-premises model (48% of Innovation Leaders and 36% of mainstream organizations). Other key challenges for Innovation Leaders include interoperability and portability, data silos and poor data quality, and AI integration with existing systems (Figure 7).
For mainstream organizations, talent shortages and lack of alignment between business and IT are cited as top-five challenges. In 2023, both of these issues also appeared in the top-five list of challenges, indicating that more attention must be directed toward finding solutions in these areas.
Figure 7: Infrastructure challenges dominate for Innovation Leaders
Q: What are the top five cloud challenges that your organization faces?
Cloud challenges by industry
Each industry faces its own dominant challenge — from managing cloud sprawl in financial services to regulatory friction in the public sector. Recognizing these pain points is critical to tailoring a strategy that lays the best foundation for generative AI and other emerging technologies.
Q. What are the top five cloud challenges that your organization faces? (Number one cloud challenge)
