FinOps evolution evident in 2025 AWS compute usage study

The state of AWS compute optimization

The "2025 Rate Optimization Insights: AWS Compute" report, analyzing approximately $3 billion in AWS compute usage, revealed that compute services dominate cloud spending, accounting for over 60% of total AWS spend. Within this category, Amazon EC2 maintains its position as the primary compute service, representing nearly 90% of compute usage with minimal change from 2023 to 2024.

The FinOps Foundation has long advocated for a shift from traditional IT financial management to cloud-specific methodologies that embrace the variable nature of cloud spending.

Central to this is the concept of Effective Savings Rate (ESR), a metric that has gained significant traction within the FinOps community. ESR measures savings achieved through rate optimization compared to on-demand pricing, providing a more holistic view than isolated metrics, like coverage or utilization.

ESR performance across organization sizes

According to the study, the median ESR across organizations increased from 0% in 2023 to 15% in 2024, signaling growing FinOps maturity. However, this improvement was not uniform across all organization sizes. The research demonstrated a clear correlation between compute usage volume and ESR performance, with organizations falling into three distinct tiers.

The smallest segment (less than $500K per year in compute usage) showed a median ESR of 0%, unchanged from 2023, effectively gaining no benefit over on-demand pricing. The middle segment ($500K-$10 million per year) improved to 23% median ESR, up from 20%. The largest segment (over $10 million per year) achieved a median ESR of 38%, a modest increase from 37% in the previous year.

This disparity highlights one of the core challenges that the FinOps Foundation has been addressing through its educational resources and community initiatives: democratizing cloud financial expertise -- making cloud financial expertise accessible to all. The FinOps Foundation's framework emphasizes that organizations of all sizes should be able to implement effective cloud financial management practices, yet the data suggests smaller organizations remain at a disadvantage.

Commitment strategy trends

The study revealed that 64% of AWS organizations now use Reserved Instances or Savings Plans, up from 45% in 2023. This adoption trend aligns with the FinOps principle of informed decision-making around commitment-based discounts. Among organizations utilizing discount instruments, 51% rely exclusively on Savings Plans, while 34% use both Reserved Instances and Savings Plans and 15% use only Reserved Instances.

The research also showed a preference for long-term commitments, with 50% of AWS organizations utilizing three-year Compute Savings Plans. This reflects the maturation of cloud adoption strategies, as organizations become more confident in their long-term cloud requirements. This aligns with the FinOps capability model's emphasis on forecasting and planning to empower organizations to continuously optimize cloud costs.

The commitment flexibility paradox

To reduce cloud costs without impacting engineering, FinOps practitioners can leverage a variety of tools, such as commitments, volume-based discounts, Enterprise Discount Programs/Private Pricing Agreements and/or alternative pricing models, e.g., Spot Instances. This activity is known as rate optimization.

What emerges from the data is a paradox in cloud financial management: While more organizations are adopting commitments, many still struggle to optimize savings. Even large enterprises with sophisticated FinOps practices face diminishing returns as they approach coverage ceilings, with the largest organizations reaching approximately 90% coverage but seeing minimal ESR improvement.

The growing importance of commitment flexibility, a concept that the FinOps Foundation has increasingly emphasized in its guidance, becomes evident. As cloud environments become more dynamic, the ability to adapt commitment strategies increases in importance. The study suggested that organizations must balance high coverage rates with the risk of overcommitment as usage patterns evolve.

The path forward: Automation and continuous cloud cost optimization

For FinOps practitioners seeking to advance their cloud financial management maturity, the study offered a compelling case for automation as a key enabler of cloud cost optimization at scale -- albeit solely based on data from AWS customers.

The research indicated that automation is the right choice for organizations seeking to maximize ESR beyond what manual optimization can deliver, minimize commitment risk by building flexibility into commitment portfolios and optimize across dynamic environments by adapting to changing usage patterns automatically.

For smaller organizations, simplified rate optimization approaches offer a path to immediate cost reduction. Midsize companies can potentially double their ESR to 40%-46%, while large enterprises can unlock incremental savings that translate to significant absolute dollars -- a 5% ESR improvement on $10 million equals $500K in annual savings.

The study ultimately reinforced what the FinOps Foundation has been advocating: Cloud financial management is a journey of continuous improvement, requiring evolving strategies as organizations mature. While the research showed progress in overall ESR performance, it also highlighted that most organizations are still in the "early innings" of optimization maturity -- a finding that underscores the ongoing importance of the FinOps Foundation's mission to advance cloud financial management practices across the industry.

The data makes a compelling case that commitment flexibility, enabled through automation, is one of the keys to achieving top-percentile ESR outcomes.

Jon Brown is a senior analyst at Enterprise Strategy Group, now part of Omdia, where he researches IT operations and sustainability in IT. Brown has more than 20 years of experience in IT product management and is a frequent speaker at industry events.

Enterprise Strategy Group is part of Omdia. Its analysts have business relationships with technology vendors.