The cloud cost wake-up call

Cloud migration created a decade of growth for the channel. Cloud optimization will define the next one, with AI workloads bringing more complex commercial models. As customers come under pressure to justify every dollar of IT spend, partners who can improve workload placement and reduce cloud waste are becoming valuable strategic advisors.

Today, most companies are overpaying for their cloud capacity, with opaque billing instruments, inaccurate usage forecasts, and workloads running in the wrong place. Flexera's 2026 State of the Cloud Report puts cloud waste at 29%, while personally, in my FinOps team, we find that up to a third of cloud outlay is recoverable. This can largely be attributed to the patchwork nature of cloud adoption over the past fifteen years, where the estate has grown without a holistic long-term operational strategy but rather a series of cloud-first or modernization projects and SaaS contracts.

Controlling cloud costs

When you combine that cumulative expenditure with recent increases in on-premises hardware and software costs, the pressure to optimize cloud infrastructure and manage costs more effectively becomes a priority. The fact is that the accepted wisdom, which dictates that migrating workloads to the cloud always leads to enhanced productivity and reduced operational complexity, is not always true. Thus, the question customers are increasingly asking their partners is whether each workload is running in the environment that delivers the best balance of cost, performance and value.

Cost has become a greater focus in recent years because high-level boardroom strategy has changed: a sluggish economy, margin pressure and the huge demand for AI investment have shifted tech spend from an IT department concern to the C-suite. As a result, the most effective cloud strategies embed cost visibility and workload governance into the operating model from day one, instead of addressing them reactively after IT spend has already become a concern.

The savings are notable and can be derived from three different approaches:

• Placement: Cloud-native applications running mainly on Platform as a Service (PaaS) and Software as a Service (SaaS) tend to justify their cost, while steady-state VM workloads can often run 20% to 40% more cheaply on Private Cloud infrastructure, where always-on legacy workloads are not penalized by public cloud pricing models due to the accumulation of granular consumption-based charges. This creates an opportunity for partners to help customers assess where workloads should run to achieve the best commercial and operational outcomes.
• Modernization: Applications and Workloads modernized to run on PaaS services drive down the infrastructure footprint and can save up to 30% on costs. For partners, modernization projects offer a way to help customers reduce complexity while improving efficiency and scalability.
• Automation: Adopting modern cloud operating models with high levels of AI and automation and leveraging GitOps and Infrastructure as Code (IaC) can instantly slash operating costs by around a quarter to a third. Partners can play a key role in helping customers embed automation in a way that reduces operational overhead and improves consistency.

The channel opportunity

Adding more strategic value requires a more nuanced approach, involving FinOps, cloud optimization and advisory services as businesses reassess whether all workloads belong in hyperscale public cloud environments. The way forward, therefore, is a well-designed hybrid model, combining the best of all worlds. Channel partners are well positioned to help customers design the model that works best for their individual business, ensuring workloads are placed where they deliver the greatest value rather than where a particular cloud strategy dictates.

For many partners, this represents a broader business model shift. Optimization engagements typically generate deeper customer relationships than migration projects because they require ongoing visibility into costs, performance, and business outcomes. In a market where long-term customer value matters more than one-off projects, optimization services naturally create stronger and more enduring partnerships.

Realigning, not reimagining

Hybrid has now become the default option for most organizations: an estimated three-quarters of UK businesses run hybrid environments – mostly by organic growth rather than long-term design. The danger is that different cloud and infrastructure environments develop their own operational complexity, leaving companies with siloed operating models, duplicated tooling and overheads that limit innovation unless consistency is maintained across the estate.

That’s why the opportunity for channel partners now is to move beyond project delivery and become long-term strategic advisers, focusing on orchestration rather than migration.

When it comes to hybrid models, success isn’t tied to any single platform; rather, it depends on how governance, security, cost visibility, and workload management are unified across whichever platform is most suitable. Partners that can bring those elements together will be best positioned to deepen customer relationships and demonstrate long-term value.