Cloud computing has an ROI problem

Cloud computing promised agility, scalability, and innovation, but many organizations are finding their ROI underwhelming. According to Datacom’s 2025 Cloud and Infrastructure Report, less than half of Australian businesses believe cloud computing has met their expectations. High costs, complex multicloud setups, skill shortages, and difficulties managing cloud financial practices are preventing full benefits. While cloud enables AI, automation, and operational efficiency, many enterprises face unexpectedly high total costs of ownership. Some are even migrating workloads back to private data centers. To unlock its full potential, deliberate architecture redesign, financial oversight, and ongoing optimization are essential.

At the heart of this issue is the widening gap between the promises of cloud computing and the financial and operational realities. The fundamental problem isn’t necessarily the technology itself but its true cost versus the value delivered. Business leaders are reevaluating the vision of cloud computing as a cost-saving measure and rethinking their strategies as they examine the numbers.

Agility and scalability at a high cost

One of the primary reasons cloud computing gained such rapid traction was the promise of scalability and agility. Enterprises can dynamically expand resources as needed, scale down when demand decreases, and respond to changing market conditions with unprecedented speed. It’s been an incredible enabler for innovation and growth. However, what many companies initially overlooked—and is now painfully evident—is the steep price tag associated with these benefits.

Take scalability, for instance. The ability to scale infrastructure on demand has dramatically streamlined operations, but it also introduced a new level of unpredictability in IT budgets. Usage-based pricing often leads to unforeseen spikes in expenses. Unoptimized workloads, lack of cost governance, and resource overprovisioning further exacerbate these financial burdens. While organizations enjoy the benefits of elasticity on paper, the long-term costs of maintaining scalable systems in the cloud have become unsustainable for many.

Similarly, agility remains one of the most-touted benefits of the cloud, but it comes with high costs for modernization and operational transformation. Migrating to the cloud is just the beginning. Organizations then need to refactor workloads, retrain staff, and implement entirely new workflows and tools to effectively leverage cloud-native capabilities. For many, this ongoing investment has negated much of the initial appeal.

Operational complexity

Another core part of the ROI problem lies in the increasing complexity of managing modern cloud environments. Most enterprises now adopt some form of hybrid or multicloud architecture to optimize for flexibility and cost-efficiency. Although this approach allows organizations to leverage the strengths of different cloud service providers, it also introduces complications.

Managing cloud infrastructure across multiple vendors requires deeper expertise, advanced monitoring and automation tools, and significant coordination. The shortage of skilled cloud architects and engineers only adds to the challenge, further inflating costs for training, recruitment, or outsourcing. Billing in multicloud environments is another significant pain point. Many companies report that managing cloud expenses has become so convoluted that they lack visibility into where their money is going, let alone how to properly optimize things. Without well-established financial management practices, costs spiral out of control, creating a disconnect between cloud spending and business value.

Migrating workloads back on-premises

One of the most telling signs of the cloud ROI problem is a trend that would have been unthinkable just a few years ago: Some enterprises are moving their workloads back to private data centers or partnering with managed service providers. Recent data from Australia reveals that this trend is gaining traction, and I’ve observed similar responses across other major markets, including the United States and Europe.

The decision to pull workloads out of the cloud signals a collective reevaluation of the initial assumptions that drove cloud adoption. For many organizations, particularly those running steady-state workloads, private data centers or managed hosting environments offer better cost predictability and control. The high fixed costs of on-premises infrastructure, once a deterrent, are now seen as an advantage in avoiding the budgetary volatility of usage-based billing. Additionally, organizations with strict compliance requirements or legacy systems find it difficult to justify the transformation costs required to fully embrace the cloud.

While some argue that retreating from the cloud is regressive, it’s simply prudent business decision-making for organizations that need to recalibrate after realizing the true cost of cloud deployments. Enterprises are not rejecting cloud technology but increasingly opting for a more nuanced, strategic approach to their IT architectures that combines cloud and on-premise infrastructure based on workload requirements, cost profiles, and long-term goals.

Deliberate management required

The challenges facing cloud computing today don’t mean the technology has failed. On the contrary, the cloud has enabled enterprises to innovate, grow, and operate in ways that weren’t possible just a decade ago. However, organizations must recognize that realizing the full potential of the cloud requires more than just a migration mindset. Cloud success is predicated on deliberate ongoing management and optimization.

To address the ROI problem, enterprises need to adopt a forward-thinking approach to cloud governance. This includes actively monitoring and optimizing workloads, employing observability tools, and institutionalizing financial management practices for the cloud. Investments in skills development and process transformation will also yield long-term benefits. Additionally, organizations must be willing to reevaluate their architecture regularly, identifying which workloads genuinely benefit from remaining in the cloud versus which are better served on premises or on dedicated infrastructure.

A cloud journey, not a destination

Cloud computing’s ROI problem underscores the need for a more refined understanding of how to maximize value. Agility, scalability, and innovation remain real and achievable, but they come at a price organizations must carefully account for. As the industry matures, businesses are learning to shift their view of cloud adoption from a one-time event to an ongoing journey of cloud optimization.

Organizations that embrace this mindset will likely see the promises of cloud computing fulfilled. Those that view the cloud exclusively as a cost-saving measure may continue to struggle with its ROI. The path forward lies in balance between on-premise and cloud, between cost and innovation, and between technology adoption and strategic investment. And although this data may originate from Australia, the lessons resonate far beyond its borders. Cloud computing, after all, is global, and so too is the challenge of unlocking its true potential.