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Unexpected costs hit many as they move to cloud storage

A Wasabi survey of cloud storage customers finds more moving to the cloud, but they are experiencing busted budgets and unexpected fees, and expect big demands from artificial intelligence workloads

Most organisations spend more on cloud storage than they budget for, with large numbers migrating more data to the cloud than planned. Those numbers are even higher for companies that have adopted cloud storage in the past two years, with unexpected costs coming from storage capacity growth, egress fees and application programming interface (API) call charges.

Meanwhile, the number of organisations that expect to increase their use of public cloud storage is set to grow compared with 2023.

Those are the findings of the Wasabi 2024 global cloud storage index report, which questioned 1,200 IT decision-makers with involvement in public cloud storage purchasing in organisations with more than 100 employees.

More than half (53%) of respondents had exceeded their cloud storage budget. The main reasons organisations exceeded budgets included using more storage than planned (42%) and migrating more apps and data to the cloud than planned (45%).

Nearly three-quarters (72%) of those who were new to the cloud in 2022 and 2023 exceeded budget spend. Also, these respondents cited high storage use and growth, unanticipated egress fees and API call fees as the three main reasons for exceeding budgets.

Cloud storage costs and pitfalls

Cloud storage is well-suited to some use cases. It offers flexibility that allows organisations to scale up and down easily in terms of capacity.

It can therefore be very well suited to applications that may experience spikes in demand that need to “burst” to the cloud. It can also be useful for data accessed less frequently and that is unlikely to be downloaded back to on-premise locations.

Moving data off-cloud and accessing it are key costs that go beyond mere storage, and it is these, such as egress costs, that can catch out organisations new to cloud storage. 

Cloud storage adoption rising

According to the survey, 93% of organisations plan to increase public cloud storage capacity in 2024. This is 9% higher than last year’s survey, which indicated that 84% expected an increase in cloud storage capacity.

Meanwhile, 90% of respondents expect their cloud storage budgets to increase in 2024, up from 84% in 2023, with new data security, backup and recovery requirements among the reasons for increased spend.

Across the full set of respondents, 47% of cloud storage billing is allocated to data and usage fees (including API calls, operations, egress and retrieval), which is the same as last year’s survey results.

The number of respondents whose organisations are “cloud-first” increased in 2024 to 42%.

AI/ML driving storage growth, creating concerns

A big factor in cloud storage growth is artificial intelligence (AI) and machine learning (ML) workload adoption.

Nearly all (99%) respondents plan to adopt or are already implementing AI/ML solutions and services.

Half of them (49%) expect AI/ML workload adoption to create challenges because data will need to be stored across a wide range of locations, such as edge, core and cloud.

Current or planned AI workload adoption is dominated by generative AI (49% of respondents), followed by AI/ML solutions for security and compliance (45%) and product design (39%).

Nearly all (97%) respondents believe their organisation has storage-related concerns associated with AI/ML.

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