Businesses across Europe are facing spiralling cloud infrastructure costs that have left many considering cuts to their AI, cybersecurity, and IT staffing budgets, according to new research from Akamai.

After polling 750 IT decision makers in the UK, France and Germany, the cloud computing firm discovered that two-thirds (67%) expect cloud costs to rise over the next year, with almost half predicting steep increases of at least 10%.

The majority of businesses (68%) are finding that these increasing cloud costs are translating into less budget for other areas. 

New AI projects (26%), cybersecurity (26%), and IT staff costs (24%) are among the most frequently cited cutbacks. These trade-offs prompted one in five businesses to brand their cloud computing costs as ‘unmanageable.’

Yet, despite the anticipated cost rises, two in five (41%) say that the cost and complexity of migrating data and applications outweigh the potential benefits of switching providers.

Although AI-related services are one of the top factors behind cost hikes (37%), AI ambition is still high, with 65% of businesses expecting to increase their AI investment over the next twelve months, even though just 25% report budgets that can fully support their AI initiatives, and only 11% that say their AI projects are self-sustaining through cost or productivity gains.

However, that is having a considerable impact, with just 14% of firms exploring ‘cutting-edge’ AI applications, or considering themselves to have fully embraced AI across their business

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“Leaders need to take a hard look at where they’re spending and what outcomes they expect,” said James Kretchmar, global CTO for cloud technology at Akamai. 

“This is especially true with AI, where businesses are struggling to squeeze ROI out of their investments. Traditional ROI models don’t map neatly to AI — productivity alone isn’t enough.

“Companies have to prioritise the quality of outcomes and use the right tool for the job. This includes looking beyond the legacy cloud providers to those architected for performance-sensitive applications like inference.

“Against this backdrop, cloud hyperscalers continue with contract lock-in and egress pricing, which means keeping cloud costs under control is impossible for many.”