Why Enterprises Are Overpaying for Cloud by 65%
The average enterprise wastes $12M annually on public cloud. We break down exactly where the money goes — and what the alternative looks like with hard numbers.
The Number Nobody Wants to Talk About
Gartner estimates that 65% of enterprise cloud spend is wasted. Not misallocated — wasted. Paying for resources that sit idle, egress fees that compound silently, and premium pricing for commodity compute that runs 24/7.
For a mid-size enterprise spending $18M/year on AWS or Azure, that's $11.7M in waste. Every year.
This isn't a FinOps problem you can tag-and-alert your way out of. It's a structural problem with how public cloud pricing works — and it requires a structural solution.
Where the 65% Actually Goes
We've audited cloud spend for dozens of enterprises across fintech, healthtech, and SaaS. The breakdown is remarkably consistent:
1. Always-On Compute at On-Demand Rates (30-40% waste)
Most production workloads are steady-state. Your API servers, databases, message queues, and background workers run 24/7/365. They're not "elastic" — they're permanent.
Yet most enterprises run them on on-demand or lightly-reserved instances. The math doesn't work:
| Resource | AWS On-Demand (mo) | Dedicated Hardware (mo) | Delta |
|---|---|---|---|
| 64 vCPU / 256GB RAM | $3,180 | $850 | -73% |
| 1TB NVMe Storage | $100 | $15 | -85% |
| GPU (A100 80GB) | $2,920 | $900 | -69% |
Even with 3-year reserved instances, AWS is 2-3x more expensive than equivalent dedicated hardware for steady-state workloads.
2. Egress Fees — The Silent Tax (10-15% waste)
AWS charges $0.09/GB for data leaving their network. Azure charges $0.087/GB. For an enterprise moving 50TB/month between services, regions, or to end users, that's $4,500/month in pure tax for the privilege of accessing your own data.
On private infrastructure with direct peering, egress is effectively $0.
3. Storage Sprawl (10-15% waste)
S3 seems cheap at $0.023/GB. Until you have 500TB of logs, backups, and datasets that nobody's cleaning up because the bill is buried in a 200-line invoice. That's $11,500/month — for storage that could live on $2,000/month of object storage on Ceph.
4. The "Managed Service" Premium (5-10% waste)
RDS costs 30-40% more than running PostgreSQL on equivalent compute. ElastiCache charges a premium over self-managed Redis. Managed Kafka, managed Elasticsearch, managed everything — each with a 20-50% markup over the underlying resource cost.
Managed services make sense when you don't have ops capability. When you do — or when you partner with someone who does — you're paying a premium for convenience you don't need.
The Objections (And Why They Don't Hold)
"But we need elasticity"
Do you? Look at your CloudWatch metrics. If your compute utilization is above 40% baseline with predictable peaks, you don't have an elasticity problem. You have a capacity planning problem — and that's cheaper to solve with right-sized dedicated infrastructure plus a small burst tier.
True elastic workloads — seasonal traffic, batch processing, dev/test environments — are typically 15-20% of total spend. Keep those on public cloud. Move the other 80% to infrastructure that doesn't charge you a 3x premium for predictability.
"We can't operate our own infrastructure"
You don't have to. Managed private cloud — OpenStack on dedicated hardware, operated by a specialist team — gives you the cost structure of owned infrastructure with the operational model of a service. Your team interacts with APIs and dashboards, not rack-and-stack.
"Migration is too risky and expensive"
A well-planned migration of containerized workloads to Kubernetes on private cloud takes 6-12 weeks, not 6-12 months. If your workloads are already containerized (and in 2025, most are), the migration surface is smaller than you think.
The cost of migration is a one-time investment. The cost of staying on overpriced public cloud compounds every month.
The Math That Matters
Here's a real scenario from a Fugoku engagement:
Before: 340 vCPUs, 1.2TB RAM, 80TB storage, 4 GPUs on AWS
- Monthly AWS bill: $127,000
- Annual: $1.52M
After: Equivalent capacity on managed OpenStack + Kubernetes
- Monthly cost: $44,000 (infrastructure + management)
- Annual: $528,000
Annual savings: $996,000 (65.3%)
Migration took 8 weeks. Payback period: 3 months. The infrastructure performs better because there are no noisy neighbors, no shared storage controllers, and no hypervisor overhead eating 10-15% of your compute.
What a Migration Actually Looks Like
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Audit (Week 1): Map every workload, its resource consumption, and its cloud dependencies. Identify what moves, what stays, what gets retired.
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Architecture (Week 2): Design the target environment. Kubernetes clusters, networking topology, storage tiers, monitoring stack. No surprises later.
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Build (Weeks 3-4): Provision infrastructure, deploy platform services, establish CI/CD pipelines to the new environment.
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Migrate (Weeks 5-7): Move workloads in priority order. Stateless services first, then stateful. Database migrations with replication cutover for zero downtime.
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Validate (Week 8): Performance testing, security audit, runbook handoff. Your team operates with confidence from day one.
The Decision Framework
Move to private cloud if:
- Your steady-state compute exceeds $50K/month
- More than 60% of your workloads run 24/7
- You're spending more than $5K/month on egress
- You have (or can partner with) ops capability
Stay on public cloud if:
- Your workloads are genuinely unpredictable
- You're pre-product-market-fit and need flexibility over cost
- Your total cloud spend is under $20K/month
The threshold is lower than most people think. And the savings start the month you migrate.
Fugoku helps enterprises cut cloud costs by 65% through managed private cloud infrastructure. Talk to us about what your workloads actually cost — and what they should cost.