Most businesses with 25 to 100 employees are wasting somewhere between a quarter and a third of what they spend on cloud services every year. That number comes from Flexera's 2026 State of the Cloud Report, and it has barely moved in five years despite constant attention and a growing industry of tools designed to address it.
For a 50-person company paying $30,000 a month across Microsoft 365, cloud infrastructure, and a handful of SaaS platforms, that is roughly $7,500 to $9,600 disappearing every month without producing anything.
The waste rarely looks dramatic. It is not a bad vendor or a wrong decision. It is a license that never got removed, a server that kept running, a subscription that renewed automatically in March and nobody noticed until November. Here is where most of it accumulates.
1. Microsoft 365 Seats Nobody Is Using
This is usually the biggest single source of waste for businesses in the 25 to 100 employee range, because M365 is often the largest monthly IT line item.
CoreView analyzed more than five million Microsoft 365 users and found that 44 percent of licenses are oversized or underutilized. Users assigned to Business Premium when their actual usage would justify Basic. Accounts for people who left six months ago that nobody deprovisioned. Admin accounts from a one-time implementation project that are still sitting active.
A 75-person company with 80 M365 Business Premium licenses at $22 per user per month runs about $1,760 monthly. If 44 percent of those seats are underused or idle, that is roughly $775 per month in licenses serving no one. Around $9,300 a year.
Structured M365 audits typically reduce licensing spend by 20 to 30 percent. But someone has to pull the usage reports, identify the candidates, and actually make the changes. That does not happen automatically. And if you want a clear picture of what your M365 plan actually covers beyond core licensing, this breakdown of what Microsoft 365 includes for backup is worth reading before you start.
2. SaaS Tools Nobody Is Tracking
Zylo manages more than $40 billion in SaaS spend. Their 2025 data found that 52.7 percent of purchased SaaS licenses go completely unused and that 85 percent of SaaS spending happens outside IT's line of sight.
That second number matters most. Someone in marketing signs up for a research tool. A project manager starts a trial and forgets to cancel before the billing kicks in. The sales team adds a platform to a company card. Nobody has a complete list of what the company is paying for because most of it was never centralized.
The average company with 50 to 99 employees runs around 32 SaaS applications. At $4,830 per employee per year in SaaS spend (Zylo's 2025 average), a 60-person company is spending close to $290,000 annually on software. If more than half of those licenses are unused, that is $150,000 sitting idle.
The other outcome is duplication. Paying for both Slack and Teams for messaging. Both Zoom and Teams for video. Both Dropbox and OneDrive for file storage. Nobody chose to pay for all of these simultaneously. It accumulated over time without anyone tracking the full picture.
3. Cloud Servers Running When Nobody Is Working
This one applies to businesses that have moved any infrastructure to AWS, Azure, or Google Cloud.
A development team spins up a test environment for a project. The project winds down or gets deprioritized. Nobody shuts off the servers because there was no process requiring it. A machine needed eight hours a day five days a week ends up running 168 hours a week but doing useful work for only 40. That is 76 percent idle compute billed at full price.
Flexera's research shows the average cloud workload uses roughly 20 percent of its allocated compute. Teams provision for peak demand and never revisit the sizing once the initial pressure eases.
Right-sizing those instances to match actual usage typically cuts compute costs by 30 to 50 percent. The challenge is that someone needs to be actively watching the usage data and making the call to scale back.
4. Orphaned Storage Nobody Deleted
When a cloud server or database gets removed, the storage attached to it often does not go with it.
Old disk snapshots, backup volumes, data archives from completed projects, images from experiments that went nowhere. None of them generate alerts. None of them cause visible problems. They just appear on the cloud bill every month.
Spendark's 2026 cloud waste analysis puts orphaned storage at roughly 15 percent of total cloud waste, with unattached snapshots adding another 10 percent. For a company spending $5,000 a month on AWS or Azure infrastructure, that is $750 to $1,250 per month in storage nobody is using.
This category is nearly invisible without a regular audit of active versus inactive cloud resources. There is no alarm that fires when a snapshot passes its useful life.
5. Over-Provisioned Services From Day One
There is a reasonable tendency when setting up cloud infrastructure to size for what you might need rather than what you actually need right now. A larger database instance than current data volumes require. A platform licensed at a tier above actual usage. More storage than the team will consume in the near term.
That over-provisioning made sense at setup when the cost of undershooting felt higher than the cost of overshooting. It rarely gets revisited as actual usage patterns become clear, so the original generous sizing just stays.
This shows up across services: cloud databases, virtual desktops, voice and video platforms, storage tiers. Each inefficiency is small. Across a full environment for a 50-person company, they compound.
The Common Thread
None of these are about making bad decisions. They are about decisions made once and never reviewed, and resources provisioned once and never cleaned up. Cloud environments drift. SaaS portfolios grow without anyone keeping score. License assignments go stale when people leave. The bills reflect everything that ever got turned on, not what the business actually uses today.
Flexera found that 60 percent of organizations now rely on a managed IT provider to help control cloud costs. The reason is practical: the tooling to surface all of this exists, but reviewing usage data, auditing subscriptions, and cleaning up orphaned resources takes consistent time and attention that most internal teams do not have alongside their regular work.
If you have never done a structured cloud cost review, the M365 license audit is usually the best starting point. The data is straightforward to pull, the savings are immediate, and it gives you a clear baseline for understanding what else needs attention across the environment. For context on cloud infrastructure decisions more broadly, the cloud migration checklist covers what to think through before moving workloads.
If you want to know where your cloud spend is actually going, a cloud cost audit is one of the first things we do with new clients. Get in touch and we can walk through what we typically find.
Frequently Asked Questions
How much cloud spend is the average business wasting?
Industry research from Flexera, Zylo, and others consistently puts the figure at 25 to 30 percent for most organizations. For businesses with 25 to 100 employees, the main sources are unused Microsoft 365 licenses, untracked SaaS subscriptions, and cloud infrastructure that was provisioned and never right-sized.
How do I find out which Microsoft 365 licenses are being wasted?
The Microsoft 365 admin center includes usage reports that show activity per user. A license with no activity in the past 30 days is a strong candidate for removal or downgrade. CoreView's research across more than five million users found that structured audits typically reduce M365 costs by 20 to 30 percent.
What is shadow IT and why does it make cloud costs hard to manage?
Shadow IT refers to software and services purchased by employees or departments without IT oversight. Zylo's 2025 data shows that 85 percent of SaaS spending happens outside IT's visibility. This leads to duplicate tools for the same function, subscriptions that auto-renew without review, and costs that do not appear in any centralized tracking.
Should we do a cloud cost audit ourselves or bring in outside help?
A one-time internal audit is feasible for a team with time to focus on it. Maintaining that visibility on an ongoing basis is harder. Most businesses find that without consistent oversight, cloud costs drift back up within a year. Sixty percent of organizations now work with a managed IT partner specifically to handle this kind of continuous optimization.
How often should we review our cloud and SaaS spend?
At minimum, annually before major renewal cycles. Quarterly reviews catch orphaned resources faster and prevent small inefficiencies from compounding. The first review almost always surfaces years of accumulated waste that a recurring process then keeps under control.