For the first decade of the report, security held the top spot for cloud challenges, but for the third year in a row, managing cloud spend (84%) is maintaining its number one spot for all respondents. As additional workloads, and the associated spend, find their way into the cloud, the need to manage and optimize this spend becomes paramount. Security always is—and always should be—a top concern in the digital age. Seventy-five percent said top challenges for all organizations include governance, managing software licenses and a lack of resources/expertise.

With managing cloud spend being a persistent challenge for organizations, it’s easy to see why FinOps continues to evolve and grow as a cultural practice and financial management discipline. Seventeen percent of respondents indicated they still struggle with cloud forecasting and budgeting. As FinOps practices mature, forecasting capabilities should increase.

However, it’s worth mentioning that estimated wasted cloud spend is trending downward. Since reaching a high of 32% four years ago, estimated wasted cloud spend on IaaS and PaaS has decreased, reaching a low of 27% this year. It’s another indication that the implementation of FinOps practices is financially benefiting many organizations. There isn’t much change in wasted software spend this year, but software licenses can greatly impact the total cost of an application running in the cloud. Respondents reported that wasted software spend in public cloud was 24%.

Provider discounts are one way organizations can rein in costs. In particular, reserved instances and savings plans can help organizations achieve significant discounts, but they’re still utilized by less than half of the respondents. Bespoke negotiated discounts are more common with Oracle (35%) and IBM (27%) than with other providers. This is most likely due to existing contractual relationships with these providers for other services that are leveraged to obtain cloud consumption discounts.

As in years past, the most frequently used discount is the Microsoft Enterprise Agreement (EA), which is a common contractual vehicle for many organizations that use Microsoft products and services.

Interestingly, almost all respondents (96%) are using at least one of the cloud provider discount options. The average number of public clouds used is 2.4, and the average number of discount options used across all cloud providers is 3.9. This is good to see, but there’s still room for additional discounts to be used for most organizations.

For most organizations, SaaS costs continue to be tracked separately from IaaS and PaaS costs.

Unit economics is the practice of understanding and analyzing costs at the most granular level (per unit). This could be anything that creates value for an organization (e.g., customer or transaction). In this year’s report, a similar number of organizations use a unit economics model for cloud costs. We expect to see these numbers increase as FinOps practices evolve, but it’s still relatively early for many organizations to get to that level of maturity.

Enterprises are much more likely than SMBs to use a unit economics model (43% for enterprise, 27% for SMB). This emphasizes the idea that enterprises are typically more mature with regard to their FinOps practices, and they may be further down the path to finding and using a unit metric to measure the return on their cloud investment.

Enterprises have historically been more likely to utilize Azure compared to SMBs, and the trend continues this year. AWS has a slight lead over Azure for organizations running significant workloads (53% to 50%, respectively), but Azure has the overall lead when some workloads are added (81% to 79%, respectively). These differences between these two providers for enterprise organizations have been minimal over the last few years, and it continues to be a neck-and-neck race among those surveyed for the report.

Year over year, there was very little change among the leaders. This again supports the ongoing theme that many organizations seem to have found their steady state regarding the clouds they’re using.

The trends that we’re seeing continue for SMBs as well. They’re more likely to use AWS for their public cloud workloads than any other provider. Seventy-seven percent of SMBs run some or significant workloads with AWS.

Diving into the year-over-year analysis, it’s noteworthy that this is the first year we’ve seen a decrease in adoption for both AWS and Azure for SMBs. Google Cloud Platform also dropped slightly, but interestingly all others saw increased usage by SMBs.

Similar to last year, AWS and Azure are nearly tied across all spending tiers, although Azure has a slight edge for those spending $1 million or more monthly. For those spending less than $50,000 monthly, Google Cloud Platform leads.

When looking a bit closer, enterprises spend more in higher tiers than do SMBs. That’s not surprising since it also aligns with the public cloud adoption rates we’ve seen.

Respondents indicate enterprises lean more toward Azure usage, whereas SMBs lean more toward AWS, again in line with what we’ve seen for provider adoption. For almost all spending tiers, AWS leads Azure across the board for SMBs. Google Cloud Platform was in third place, but interestingly, 2% of SMBs are spending $1 million or more monthly, whereas last year that percentage was zero.

When considering virtual machines (VMs), Microsoft Azure Stack and Microsoft System Center continue to lead for users with more than 100 instances in the private cloud and on-premises space. Neither AWS Outposts nor Google Anthos/GKE had any respondents with more than 50 instances running in either of these environments, which is a significant drop from last year.