It’s no surprise that cost (85%) and security (82%) continue to be the leading challenges for organizations. In fact, this marks the fourth consecutive year that cost has outranked security as the top concern, after a decade with security in the lead. Managing software licenses isn’t far behind, with 78% of all respondents ranking this in third place.

Cloud providers are continuously adding new resources and services, and cloud-based AI services are notably more expensive than traditional options. On top of that, SaaS and PaaS vendors frequently implement different pricing structures when compared to IaaS providers. These factors contribute to growing complexity, which helps explain why managing cloud spend remains a challenge—even though 63% of organizations have implemented FinOps practices.

Twenty-seven percent of respondents expect to increase their public cloud spending, while 17% reported exceeding their public cloud budgets in the past year. These trends have remained relatively stable from year to year, but as organizations adopt new resources and services, accurate forecasting remains a persistent challenge. The introduction of AI is poised to create more budget overruns.

For the past five years, estimated wasted cloud spend on IaaS and PaaS has been decreasing, but this year we saw a slight uptick to 29%, and wasted cloud software spend inched up 1 percentage point, perhaps a result of the increased cost complexity brought on by AI and new PaaS/SaaS offerings. Gartner reports that SaaS spending continues to climb, yet the level of waste remains relatively constant, suggesting organizations are gaining ground on effective SaaS cost management.

With cloud spending and cost management growing more complex, provider discounts offer organizations valuable opportunities to optimize budgets and reduce overall expenses. This year, there has been a modest uptick in the adoption of commitment-based discounts—such as reserved instances (RIs) and savings plans (SPs)—across the major cloud providers: AWS, Microsoft Azure and GCP. Notably, 48% of respondents now use Google Committed Use Discounts (CUDs)—up 4 percentage points from last year—and 45% take advantage of AWS RIs, which increased by 3 percentage points. Azure RIs and SPs have also increased by 4 percentage points year over year. These programs deliver tangible savings, so the rise in their use is a positive trend. This may signal that customers are cautious about long-term commitments on these cloud platforms and are prioritizing greater flexibility.

Still, fewer than half of organizations are utilizing any one commitment discount per cloud provider. This may be due to the complexity and time required to manage commitment-based savings, or it could reflect a deliberate choice to maintain speed and flexibility. Many organizations prioritize innovation in the cloud, and some are reluctant to restrict engineers to specific resources, fearing it could hinder progress and innovation. The combination of commitment-discount complexity and the desire for maximum flexibility results in more than half of respondents using on-demand pricing.

Interestingly, the steepest declines in discount usage are seen with IBM and Oracle. IBM cloud subscriptions dropped by 10 percentage points to 29%, and IBM RIs saw a 12-point decrease to 26%. Oracle experienced the largest dip, with usage of universal credits falling from 39% to just 25% year over year. This could be due to the sample size combined with the smaller customer base of both clouds. As organizations progress in their FinOps maturity, we expect to see increased usage of RIs and SPs.

The use of Azure Enterprise Agreement has fallen to 43% as Microsoft phases out this program, perhaps prompting customers to transition toward the Microsoft Customer Agreement for Enterprise (MCA-E).

Does your organization track SaaS costs as part of laaS/PaaS costs?

N=753
Source: Flexera 2026 State of the Cloud Report (Figure 29)

More organizations are moving toward tracking their SaaS costs as part of their IaaS/PaaS costs and moving away from tracking SaaS costs separately.

Notably, 8% of respondents said they aren’t tracking SaaS costs, an increase from last year’s 5%. Those who don’t track their SaaS costs no doubt have shadow IT—and a visibility problem. This underscores growing complexity; SaaS is proliferating, but a growing number of organizations aren’t tracking the cost.

Does your organization track a unit metric to improve unit economics?

All: N=753, Enterprise: N=620, SMB: N=133
Source: Flexera 2026 State of the Cloud Report (Figure 30)

Organizations seek to gain more granular visibility into their cloud expenditures so they can better understand the value these investments deliver. By analyzing unit costs, companies can make more informed decisions about cloud and SaaS spending returns. Enterprises (53%) are much more likely than SMBs (32%) to measure unit economics; they likely have more dedicated resources to establish the data pipeline and track a unit metric.

What’s your usage of the following public cloud providers?

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Source: Flexera 2026 State of the Cloud Report (Figure 31)

The neck-and-neck battle for dominance between AWS and Azure continues. Both organizations are being used in some capacity by 88% of respondents. AWS (83%) pulls slightly ahead of Azure (79%) if considering those who are currently running some or significant workloads in the cloud.

Currently, AWS holds a slight edge for active enterprise workloads, with 84% compared to Azure’s 82%. However, when factoring in organizations that are experimenting or have future plans, Azure moves ahead with 94%, while AWS trails at 92%.

For SMBs, AWS continues to be the preferred choice: 77% are currently running some or significant workloads with AWS compared to 63% using Azure. For all organizations GCP remains firmly in third place but lags significantly behind the two frontrunners.