The Real Cost of Flying Blind on Cloud Spend

SMEs without cloud financial governance waste 27–35% of every euro they spend on cloud services. For a typical small business spending €300,000–€600,000 annually on cloud, that translates to €80,000–€210,000 burned each year on idle resources, oversized VMs, and ghost licences. The data is clear: organisations that implement structured cloud financial management recover 20–40% of their spend within months, with payback periods as short as three to six weeks.

For expat-owned SMEs operating in Spain — where cloud adoption is accelerating at nearly 20% CAGR but lags the EU average — the gap between optimised and unoptimised cloud spending represents a critical competitive disadvantage.

Every Fourth Euro on Cloud Is Wasted

The Flexera 2025 State of the Cloud Report found that organisations self-estimate 27% of their IaaS/PaaS cloud spend is wasted. Independent assessments suggest the real figure is worse: 78% of organisations estimate that 21–50% of their cloud expenditure is wasted, while 91% of organisations report measurable waste in their cloud spend.

The raw numbers are staggering. Harness's FinOps in Focus 2025 report calculated that $44.5 billion in cloud infrastructure spend will be wasted globally in 2025 — and that covers infrastructure alone, excluding SaaS and licensing waste.

For SMEs, the picture is particularly stark. At a 27–35% waste rate, a mid-range SME spending €400,000 on cloud services is burning €108,000–€140,000 per year on resources delivering zero value.

The sources of waste are well documented:

• Overprovisioned compute (VMs and containers running above required size) accounts for 10–12% of total waste
• Idle or stopped resources contribute another 10–15% of monthly invoices
• Orphaned storage — disks, snapshots, and backups left behind — adds 3–6% of avoidable spend
• Non-production environments left running 24/7 pile on another 4–8%

Microsoft 365 and Azure: Where SME Euros Disappear

For SMEs built on the Microsoft stack — which describes the vast majority of businesses in the expat community — the waste vectors are especially pronounced. Microsoft 365 licence waste runs between 20–35% of an organisation's M365 budget.

Analysis of over 5 million worker accounts reveals alarming inactivity rates: 37% of E1 licences inactive, 23% of E5 licences inactive, with unassigned licence rates even higher. The cost differential between tiers makes this waste expensive. M365 E5 costs approximately €57/user/month versus €36/user/month for E3 — a 60% premium.

Ghost licences — subscriptions still active for departed employees — represent one of the most common and easily preventable waste categories. Each idle licence costs €20–€50+ per user per month.

On the Azure infrastructure side, industry benchmarks show 35–45% of VMs and containers run above their required size, with many organisations discovering expensive VM SKUs running at just 10% CPU utilisation. Right-sizing alone typically yields 20–40% savings without any architectural changes.

Reserved Instance and Savings Plan underutilisation compounds the problem. One-year Azure Reserved Instances save 20–30% versus pay-as-you-go pricing; three-year commitments save 40–72%. Combined with Azure Hybrid Benefit, savings can reach up to 80%. Yet 58% of developers do not use these mechanisms at all.

Why SMEs Are Disproportionately Exposed

Enterprise organisations increasingly address cloud waste through dedicated FinOps teams — 59% now have one. SMEs almost never do. Only 43% of SMBs have a Cloud Centre of Excellence, compared to 74% of enterprises. This structural gap means cloud spending at SMEs operates largely without governance, visibility, or optimisation.

Only 30% of organisations know exactly where their cloud budget goes. Organisations exceed their cloud budgets by 17% on average, and 69% report budget overruns. For an SME where cloud costs represent 47% of the total technology budget, a 17% overrun can destroy an entire quarter's IT contingency fund.

Shadow IT intensifies the problem. IT departments control just 26% of SaaS spending. Approximately 48% of enterprise apps are shadow IT purchased without IT approval. The security implications are severe: one in three data breaches now originates from shadow IT.

For expat-owned SMEs in Spain specifically, the context adds urgency. Only 27.2% of Spanish enterprises currently use cloud services — well below the EU average of 42.5% — but Spain's cloud market is the fastest-growing in Europe at 18–22% CAGR through 2031. This rapid growth without corresponding financial governance creates precisely the conditions where cloud waste flourishes.

FinOps Implementation Delivers 20–40% Savings in Months

The return on implementing structured cloud financial management is among the highest-ROI investments an SME can make. Companies implementing FinOps are projected to save $21 billion globally in 2025, with individual organisations achieving cost reductions of 20–40%. Time to value is remarkably short, with payback periods of 3–6 weeks.

The savings breakdown for a typical engagement follows a predictable pattern:

• Scheduling non-production workloads delivers 60–70% savings on those workloads
• Right-sizing compute resources cuts 20–35% from compute bills
• Commitment optimisation through reserved instances captures 30–40% in discounts
• Licence optimisation across Microsoft 365 reclaims 14–29% of the M365 bill

For an SME spending €400,000 on cloud and Microsoft licensing combined, these interventions collectively represent €80,000–€160,000 in annual recoverable spend.

Hidden Costs That Never Appear in the Budget

Beyond the headline waste categories, several less visible cost drivers compound cloud overspend for SMEs that lack financial governance.

• Data egress charges account for an average 6% of cloud storage costs, and 95% of IT leaders report unexpected cloud storage costs. An SME transferring 50 TB monthly pays approximately €4,500 in egress fees alone.
• Logging and observability costs can represent up to 90% of total observability spend, often triggered by a single misconfigured debug-level log setting left in production.
• Snapshot accumulation — orphaned disk snapshots and backup volumes — typically represents 1–3% of monthly spend when cleanup is not automated.
• The lift and shift tax. Organisations that migrate workloads without re-architecting them frequently pay more than they did on-premises. Cloud savings only materialise with deliberate architectural optimisation.

What This Means for Your Business

The data converges on a clear conclusion: SMEs without cloud financial governance waste approximately one-quarter to one-third of every euro spent on cloud services, with the total cost easily exceeding €100,000 annually for a mid-sized business. The asymmetry between the cost of inaction and the cost of implementing FinOps is extreme — structured optimisation pays for itself within weeks.

For expat-owned SMEs in Spain, the timing is critical. Spain's cloud market is growing faster than anywhere else in Europe, government Digital Kit funding is accelerating adoption, and Microsoft 365 plus Azure dominates the SME technology stack. Every month without visibility into cloud spend is a month of compounding waste.

The organisations that build financial discipline into their cloud operations now will operate with a structural cost advantage of 20–40% over competitors who continue flying blind — an advantage that, in the margin-sensitive SME market, often determines who survives and who doesn't.

If you are not sure where your cloud budget is going, or you suspect you are paying for resources nobody is using, that is exactly where we start. An independent review of your cloud and licensing spend — with no vendor incentives, no upselling, just clarity on what you are actually paying for and what you can recover.

Sources

• Flexera 2025 State of the Cloud Report — 27% IaaS/PaaS waste estimate, 17% average budget overrun, 59% have FinOps teams
• Harness FinOps in Focus 2025 — $44.5 billion projected infrastructure waste, developer behaviour on idle resources and rightsizing
• Gartner 2025 Cloud Forecasts — $723.4 billion global public cloud spend, 69% of organisations report budget overruns
• CoreView License Optimization Report — M365 licence inactivity rates across 5 million+ worker accounts
• CloudNuro 2025 Analysis — 20–35% M365 budget waste, licence reclamation case studies
• Deloitte 2025 TMT Predictions — $21 billion projected FinOps savings globally, 20–40% cost reduction range
• FinOps Foundation State of FinOps 2025 — Only 14.2% at advanced maturity, majority still at early stages
• CloudZero 2024 Survey — Only 30% of organisations know where their cloud budget goes