Costly cloud storage fees are pushing IT budgets to breaking point

Rising cloud storage fees are severely impacting IT budgets, new research shows, as UK enterprises ramp up infrastructure spending.

Wasabi’s 2026 Cloud Storage Index report found 48% of storage costs now go toward fees, rather than actual capacity. The findings mark the fourth consecutive year in which IT leaders identified this as a key budgetary strain.

“One of the results of this fee-heavy pricing structure is budget excess,” the company said. Indeed, nearly half (46%) of UK respondents said they exceeded allocated budgets for cloud storage in 2025.

This overspending is typically due to a combination of factors, including increased storage use, growth, and migration. Wasabi noted, however, that fees have been a growing part of the problem in recent years.

“84% of UK respondents cited at least one fee-related reason why their spending on public cloud storage exceeded budget expectations,” the company said.

Cloud storage fees a major pain point

These mounting costs come at a critical time for enterprises, Wasabi said, with many ramping up investment in AI projects and transformation projects.

Storage infrastructure now forms a key underpinning component in AI initiatives, the study noted.

Only one-quarter of respondents said they had recorded a positive return on investment (ROI) with AI, yet nearly half (48%) said they’re confident in recording positive returns if infrastructure improvements can be achieved.

“When asked about the challenges they face implementing AI projects and solutions, the top response was data storage challenges like cost, data access, and management,” Wasabi said. “This highlights the key role data and storage play in a successful AI solution implementation.”

As a result, the majority of UK firms plan to increase spending on this front over the next year. Notably, nearly two-thirds (62%) of budgets will be specifically allocated to data, storage, and compute capacity build-outs.

"As organizations scale AI initiatives, they face mounting data storage and data quality challenges that can quickly erode ROI if not managed effectively," said Dave Friend, founder and CEO at Wasabi Technologies.

"Cost-efficient, reliable storage is essential to ensure high-quality data is readily available for AI models, enabling better outcomes without unsustainable infrastructure costs.”

Changing budget priorities

This surging infrastructure investment marks a shift away from traditional software-focused spending, according to Andrew Smith, director of strategy and market intelligence at Wasabi Technologies and a former IDC analyst.

Just 36% of spending is now allocated to AI-related software or SaaS solutions, highlighting the increased importance of hardware spending as an enabler of AI innovation.

“When we look at revenue allocations at the highest level of the public cloud services market – the vast majority comes from software/SaaS, not infrastructure services (IaaS),” Smith commented.

“What’s fascinating to see within our survey results this year is how most AI budget allocation is going toward infrastructure, not SaaS. In other words, it’s the complete opposite of what we might expect from a traditional market standpoint, and it’s a great illustration of the critical role cloud storage and cloud infrastructure services play in this generational build-up of AI-enabled solutions and services.”

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