‘On-demand Tech Fuels Growth, but Rising Costs Threaten Gains for Enterprises’

On-demand technologies such as public cloud, software-as-a-service (SaaS) and generative AI are reshaping digital strategies as companies pursue innovation, agility and competitive advantage, according to a report from the Capgemini Research Institute. 

However, the report highlighted that spiralling costs, fragmented management and governance gaps are eroding value, raising questions over the sustainability of returns.

The study, titled ‘The On-Demand Tech Paradox: Balancing Speed and Spend’, surveyed 1,000 executives from companies with annual revenues above $1 billion across 12 industries and 14 countries.

It found that nearly eight in 10 organisations see on-demand technologies as critical to growth, but struggle to rein in spending.

Three-quarters exceeded their public cloud budgets by an average of 10%, while 68% overspent on generative AI and 52% on SaaS, the report revealed. 

Inflationary pressures, surging AI adoption and mounting digital infrastructure needs were cited as key drivers. Meanwhile, underutilised resources, decentralised procurement and unmanaged purchases, particularly in SaaS, added to the inefficiencies. 

Nearly all executives admitted to bypassing IT departments for technology acquisitions, heightening costs and security risks.

While IT budgets are set to expand, with on-demand tech’s share expected to rise from 29% to 41% in the next year, the study shows that a few companies are capturing expected returns. 

Only 29% realised projected SaaS savings, 33% reported improved cloud service quality, while 38% achieved faster innovation with generative AI.

Capgemini said most organisations are at an early stage of financial operations (FinOps) maturity. 

Although three-quarters have or plan to establish FinOps teams, their scope remains narrow. Just 2% oversee cloud, SaaS and generative AI holistically and less than half influence business decisions.

“While on-demand technology expenses are projected to double over the next three to four years, organisations must find a way to gain transparency and control over costs while elevating value. Those that align their cloud strategy with their overall business goals are well-positioned to harness this opportunity,” Karine Brunet, CEO of Capgemini’s Cloud Infrastructure Services, said in the statement.

“By designing scalable, modular, cloud-native and frugal architecture, they are set to drive sustainable value through smarter FinOps, integrated governance, and AI-driven automation.”

Beyond financial waste, more than half of the surveyed organisations said the poor use of on-demand tech drives excess energy consumption and emissions. 

Yet, only 36% have sustainability built into FinOps, despite opportunities to reduce both costs and carbon through energy-efficient architectures and workload optimisation.