Cloud costs have become a hot topic among executive committees. CIOs and CFOs see the same reality: despite drastic optimization plans, expenditures consistently exceed forecasts.
On average, companies spend nearly 30% more than budgeted, and more than eight in ten acknowledge this gap. A frustrating, recurring phenomenon that can feel like a sign of mismanagement or a lack of foresight.
In reality, the problem lies elsewhere. It is a well-known idea among economists: the Jevons Paradox.
The Jevons Paradox: An Economic Principle 160 Years Old
In 1865, British economist William Stanley Jevons observed an unexpected effect of the Industrial Revolution: the more efficient steam engines became, the more coal consumption rose. He deduced a seemingly paradoxical conclusion: increasing efficiency, far from reducing the use of the resource, stimulates demand. This mechanism also applies today to cloud computing. As services become affordable and easy to deploy, companies consume more—so unit savings are largely offset, or even eclipsed, by growing usage.
Why the Cloud Amplifies the Paradox
Two dynamics complement each other to intensify this phenomenon. First, the fall in unit costs. Cloud resource prices fall quarter after quarter. According to 451 Research, between late 2024 and early 2025, the cost of storing databases dropped by almost 25%, and NoSQL databases by 40%. Next, deployment speed.
Where previously it took months and millions to set up a new infrastructure, now a matter of minutes and a few thousand euros suffices. The consequence: business units launch more projects, run more experiments, and process larger volumes. All these productivity and innovation gains mechanically bloat the bill.
Spending Less Isn’t the Solution
With the paradox established and clarified, one conclusion is inescapable: attempting to simply cut cloud costs leads to a dead end. Companies that try to pare budgets risk stifling innovation and losing competitiveness.
Therefore, the right approach isn’t to ask: “How can we spend less?”, but “How can we create more value for every euro invested?”
To achieve this, companies can adopt an approach that blends optimization with innovation, notably:
– Implement a business-aligned FinOps approach: it should go beyond purely technical metrics to focus on business outcomes. For example, a health-tech company we work with doesn’t track cost per cloud instance alone — it measures the cost per patient treated and revenue generated per dollar of cloud spend.
– Improve application efficiency: go beyond infrastructure: most organizations focus only on instance sizing or purchasing reserved capacity, overlooking other levers.
We have observed that some organizations cut cloud compute consumption by 50% by optimizing their application runtimes, especially Java workloads that power the majority of enterprise applications.
– Raise developers’ awareness of the economic impact: many companies discover that their developers unconsciously create costly architectures. A financial services company implemented a “nomenclature” approach where teams estimate the required cloud resources before deployment, creating accountability without slowing innovation.
– Adopt continuous optimization: cloud economics is not a one-off exercise. A retailer client implemented automated monitoring that alerts whenever spending patterns diverge from the expected business indicators, enabling rapid identification of both waste and new business opportunities.
All these concrete examples demonstrate that it is possible to combine operational efficiency, productivity, innovation, cost optimization, and value per euro invested.
What Boards Must Understand
With the rise of generative AI, this paradox is set to intensify strongly. Compute needs are increasing at an unprecedented pace, and every technical optimization opens the door to even more resource-intensive uses. Boards must therefore rethink how they view the cloud.
The real question isn’t how to cut cloud spend, but how to maximize the value it generates. Only then will the cloud stop being seen as a cost center and become what it truly is: a catalyst for growth, innovation, and productivity.
* Scott Sellers is the co-founder and CEO of Azul
