How Europe's AI efforts are being slowed by billions in annual cloud waste

European businesses are entering the AI era with a built-in handicap. A new report from IT firm Insight shows that on average, companies waste 24 percent of annual cloud capacity – capital that could have been used to fund superior and robust AI infrastructure. 

In the EMEA region, almost half of companies invest up to SEK 55 million per year in cloud services. For a company with an average cloud investment of SEK 41 million, this means almost SEK 10 million in unnecessary costs every year – money that limits investments in AI platforms, digital sovereignty resources and resilience in the technical infrastructure.

Conflicting demands as AI usage increases

These results are presented in Insights report, on digital sovereignty that outlines three conflicting demands that businesses must balance as AI usage increases:

• Economic efficiency: With nearly a quarter of cloud capacity unused, funding for AI development and data platforms is eroding.
• Operational reliability: To ensure availability, 47 percent of companies oversize their infrastructure and build in costly backup architectures for unforeseen events.
• Digital sovereignty: Increasing regulatory requirements around data residency and AI governance are increasing the need for workloads in proprietary data centers or hybrid clouds, making tradeoffs between control, cost, and performance important.

The survey found that AI cloud costs are growing at a rate of 12 percent per year. At the same time, 67 percent of companies already see digital sovereignty as a key strategic priority – a figure that will rise to 82 percent within three years. Yet, oversizing (47 %), limited financial visibility (47 %), and idle technical resources (46 %) continue to drive up costs and limit flexibility.

Despite rising costs, 56 percent of companies do not analyze total costs before making key infrastructure decisions. An additional 41 percent of respondents are constrained by legacy applications that make it difficult to change and optimize cloud environments.

– Enterprises are wasting nearly a quarter of their cloud capacity as AI increases infrastructure costs. To scale AI adoption in a sustainable way, infrastructure must be treated as a strategic asset. This requires reducing waste, keeping an eye on total cost of ownership, and consciously balancing performance, sovereignty, and long-term economic efficiency, says Sandra Simms, Head of Sweden at Insight. 

As a result, interest in hybrid cloud is growing. 85 percent of respondents are evaluating or deploying dedicated AI infrastructure. Insights’ research points to an opportunity to leverage untapped cloud investments by improving financial control, removing unused resources, and aligning cloud strategies with the demands of AI and digital sovereignty.

In Sweden, digital sovereignty is rapidly becoming strategically important. Almost three-quarters of companies see it as important today – a figure that will rise to 84 percent within one to two years and 87 percent in the longer term. This increase reflects an increased focus on sovereignty, operational reliability and long-term value as Swedish companies increase their investments in cloud and AI.

Read Insight's full report on The digital sovereignty trilemma here.