Enterprise cloud migration faces rising costs and repatriation trends

Enterprises are facing significant challenges with cloud adoption, leading to a measurable industry shift toward cloud repatriation. Reports indicate that many organizations struggle with the financial and operational complexities of cloud environments.

According to Flexera’s 2026 State of the Cloud Report, organizations estimated that 29% of their IaaS and PaaS cloud spending was wasted, while 17% reported exceeding their public-cloud budgets in the previous year. Furthermore, 82% of respondents identified security as a top cloud challenge.

Data suggests that 62% of enterprises exceeded their cloud storage budgets last year, a nine-point increase from the prior year. This is often driven by unanticipated usage and egress fees, particularly for long-lived, rarely accessed data that accumulates over time. Consequently, enterprises have already repatriated over 20% of their workloads back to on-premise environments. Beyond cost, data sovereignty and regulatory compliance regarding physical data residency are also driving the decision to move workloads away from the public cloud.