Dive Brief:
- Enterprises blew through cloud storage budgets as AI spiked data consumption last year, according to a Tuesday report commissioned by Wasabi Technologies. Vanson Bourne surveyed 1,600 enterprise cloud storage leaders for the third annual Wasabi Global Cloud Storage Index report.
- The problem has intensified, with the proportion of respondents who experienced storage cost overruns in cloud increasing nine percentage points from 2023 to 62%. One-quarter of respondents reported massive budget overruns in 2024.
- Data egress and usage fees took a toll on broader enterprise plans. More than half of respondents — 56% — said unexpected data costs caused cloud-related business delays. “Storage remains an unpredictable expense for many organizations … stalling business initiatives and slowing innovation,” Andrew Smith, director of strategy and market intelligence at Wasabi Technologies, said in an announcement.
Dive Insight:
Cloud storage can be a bargain for enterprises, until they want to process or move their data. Along with volume purchasing discounts and on-demand scalability, hyperscalers give customers low-cost tiering options for big data with low usage rates.
“Organizations will choose the cheapest possible tier when they think they’re not going to need to access the data, which makes sense,” Smith told CIO Dive. When plans change, costs rise.
Cloud storage capacity is relatively inexpensive. It accounts for 51% of cloud data bills, Wasabi found. Networking charges, API calls and fees for data egress and usage devour the rest.
Google Cloud led a charge to eliminate some egress fees in response to regulatory scrutiny early last year, and AWS and Microsoft quickly followed suit. The three cloud giants dominated the global storage market last year, capturing two-thirds of all spending.
As hyperscaler capacity rises and enterprise procurements grow, the cost-per-unit for storage has come down, Lidice Fernandez, IDC group VP, Worldwide Enterprise Infrastructure Trackers, told CIO Dive.
Despite the trend, unanticipated storage expenses remain a pain point.
Organizations are largely happy with their cloud storage until they need access to data. Nearly 9 in 10 respondents to the Wasabi survey expressed satisfaction with their current object storage provider. But 39% said billing complexity and fee structures were a problem.
“We usually think about object storage as a place to throw all your cheap, unused data,” Smith said. “But the reality is, organizations are accessing that data pretty regularly. Data that wasn’t touched for a year or more may suddenly have value for analytics or training an AI model.”
