On-Demand tech is on the rise, but spiraling costs, complexity, and governance gaps are putting returns at risk
A recent study by the Capgemini Research Institute reveals that while On-Demand technologies such as public cloud, SaaS, and Generative AI are central to driving growth and innovation for nearly 80% of organizations, spiraling costs, complexity, and gaps in governance are putting expected returns at risk. Despite the increasing adoption of cloud scalability and performance
Nearly eight in ten organisations say public cloud, Software-as-a-Service (SaaS) and Gen AI on cloud are key to drive growth, yet the same proportion are struggling to contain costs.
Paris, September 10, 2025 – As digital transformation accelerates across industries, organisations are embracing On-Demand technologies — such as public cloud, Software-as-a-Service (SaaS), and Generative AI (Gen AI) — to scale innovation, improve agility, and support competitiveness. But while the benefits are clear, a new global study from the Capgemini Research Institute published recently, ‘The On-Demand tech paradox: balancing speed and spend’, reveals that rising costs, complexity, and governance gaps are putting returns at risk. With growing demand for digital infrastructure, organisations are struggling to contain technology costs due to lack of cost visibility, underutilised resources, as well as a legacy mindset.
Organisations are pivoting from capital-intensive IT investments to flexible, consumption-based models and On-Demand technologies. According to the report, IT and technology spend is projected to rise and the share of On-Demand tech in IT budgets is expected to grow from 29% to 41% over the next year. The majority (77%) of executives view cloud scalability and performance as critical to business growth and differentiation, as it allows their organisations to scale innovation, accelerate time-to-market and stay competitive. Despite these benefits, many organisations are struggling to harness these On-Demand technologies while maintaining costs.
“The surge of On-Demand technologies – such as Public Cloud, SaaS, and Gen AI – has reshaped how leading businesses operate. These tools offer unparalleled convenience, but they come with a financial implication,” said Karine Brunet, CEO of Cloud Infrastructure Services at Capgemini and member of the Group Executive Committee. “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. By designing scalable, modular, cloud-native[3] and frugal architecture, they are set-up to drive sustainable value through smarter FinOps, integrated governance, and AI-driven automation.”
While the more advanced adopters of On-Demand tech are already reaping rewards — from cost savings and faster product innovation to improved service quality and operational productivity, less mature adopters are finding that the road ahead is not without its challenges. These include:
·Soaring costs and complexity: 82% of executives report significant increases in cloud, SaaS, and Gen AI costs. Inflation, AI adoption, and digital infrastructure demands are key drivers.
·Budget overruns: 76% of organisations exceeded their public cloud budgets (by an average of 10%), while 68% overspent on Gen AI and 52% on SaaS. Underutilised resources and decentralised procurement are major culprits.
·Shadow IT and security risks: Business units now drive 59% of Gen AI and 48% of SaaS spending. 12% of all SaaS spending is unmanaged. Nearly all executives (98%) admit to bypassing IT for tech purchases, creating inefficiencies and security vulnerabilities.
·Limited RoI realisation: Despite heavy investments, only 29% achieved expected SaaS cost savings, 33% saw desired cloud service quality, and 38% realised faster innovation with Gen AI.
According to the survey, 60% of organisations use cloud cost management tools, but only 37% evaluate their effectiveness or act on insights. While three quarters of the organisations surveyed (76%) have or plan to establish FinOps teams, most remain narrowly focused and operational in nature. Only 2% who have a dedicated FinOps function cover cloud, SaaS, and Gen AI holistically, and just 42% influence business decisions.
In addition, more than half (53%) of the organisations agree that suboptimal On-Demand tech usage leads to excessive energy consumption and increased carbon emissions. Despite this, only 36% of organisations have a strategy for integrating sustainability into FinOps. Integrating practices such as developing energy-efficient architectures, optimising computing and storage, switching off idle resources and scheduling workloads can reduce costs as well as carbon.
