Cloud Cost Reckoning Hits CIOs as Spending Rises

CIOs rethink cloud strategies as costs escalate, with some considering moving workloads back on-premises.

Feb. 4, 2026 at 6:15am

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The modern commercial cloud turns 20 in 2026, but for many CIOs, the anniversary feels more like a financial reckoning. Escalating cloud costs have undercut one of cloud computing's earliest promises: that it would be cheaper than running workloads in corporate data centers. CIOs are now rethinking their cloud strategies, with "repatriation" - moving workloads from the cloud back to on-premises - emerging as a viable option due to mounting costs.

Why it matters

The rising cloud costs have become a major concern for CIOs, with 83% of CIOs surveyed spending an average of 30% more than anticipated on cloud infrastructure and applications. This has led to increased scrutiny from CEOs and boards of directors, forcing CIOs to reevaluate their cloud strategies and consider alternatives like on-premises deployments.

The details

According to the 2025 Azul CIO Cloud Trends Survey & Report, 43% of CIOs said their CEOs or boards of directors had concerns about cloud spend. Moreover, 13% of surveyed CIOs said their infrastructure and application costs increased with their cloud deployments, and 7% said they saw no savings at all. This has led some CIOs to consider "repatriation" - moving workloads from the cloud back to on-premises data centers.

  • The modern commercial cloud turns 20 in 2026.
  • The 2025 Azul CIO Cloud Trends Survey & Report was conducted.

The players

Thomas Phelps

CIO and senior vice president of corporate strategy at Laserfiche, and an advisory board member for the SIM Research Institute.

Peter Loo

CIO of Los Angeles County.

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What they’re saying

“I never thought cloud was cheaper [than on-premises] even seven, eight years ago. Yes, you may be able to get rid of your data center footprint, maybe reduce it, eliminate it all together, but the challenge of cloud spend is that it's not predictable -- and that's why it's not cheaper.”

— Thomas Phelps, CIO and senior vice president of corporate strategy at Laserfiche (informationweek.com)

“The primary reason why the [cloud] costs have been increasing is because our use of cloud services has become much more sophisticated and much more integrated.”

— Peter Loo, CIO of Los Angeles County (informationweek.com)

What’s next

CIOs are exploring ways to better manage and control their cloud costs, including increasing transparency, optimizing resource usage, and re-evaluating the balance between cloud and on-premises deployments.

The takeaway

The promise of cloud computing being cheaper than on-premises has not always materialized, leading CIOs to rethink their cloud strategies and consider a hybrid approach that balances the speed and flexibility of the cloud with the cost predictability of on-premises infrastructure.