94 per cent of IT leaders struggle with cloud costs as AI and sovereignty drives repatriation debate

A new report from Crayon reveals cloud repatriation is back in focus as AI and compliance pressures mount

Cloud repatriation continues to linger in the minds of those in the IT space, with a new report revealing that a staggering 94 per cent of IT leaders are facing challenges to optimise cloud costs.

That is according to new research from Sapio, commissioned by Norwegian solution provider Crayon, which surveyed around 2,300 IT decision-makers across the US, Europe, the Middle East, Africa, and the Asia Pacific region.

The report focuses on how organisations are navigating the evolving landscape of cloud, AI, and infrastructure strategy.

Findings show that 41 per cent of IT budgets are now being directed toward scaling cloud capabilities, largely to support AI workloads.

While 60 per cent of IT leaders are already using AI to automate IT processes, 40 per cent say AI will be the top IT cost challenge they face over the next three years.

Security and compliance have also emerged as leading drivers for infrastructure decisions.

The report also highlights that organisations are considering shifting IT infrastructure spend toward on-premises, with an average of 37 per cent of budget earmarked for hybrid or on-premises strategies.

This shift is largely motivated by concerns over data privacy, regulatory compliance, and vendor lock-in, which are factors that have increasing influence on workload placement decisions.

The cloud repatriation discussion

The report comes after several channel partners recently told CRN they are having more conversations with businesses about cloud repatriation and moving away from private cloud, specifically the US hyperscalers - AWS, Google Cloud and Microsoft Azure.

“There's no doubt that, as much as the tariffs have spooked people, there always was this growing awareness of dependency on a small number of providers, which in any market raises eyebrows,” Eamonn O'Neill, co-founder and CTO of Lemongrass, told CRN.

Data sovereignty and jurisdiction were among the top concerns.

“It can come down to regulations,” Ian Parker, senior consultant at Axians UK said.

“Some countries have different regulations and compliance for certain things. And of course, the government is upstepping their cybersecurity governance, guidance and compliance to prevent these threats from happening.

“From my experience it’s more about control.”

Meanwhile, the Trump administration, a better understanding of cloud models, cost, and, as this new report cites, the influence of AI are also drivers in cloud repatriation.

“AI has driven people to think about where - and, perhaps most importantly, who - has access to their data. This has led to organisations taking a real assessment of their data and data transfer processes internationally,” Mark Darrah, cloud practice lead at Arc also told CRN.