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Cloud invoices inflated by up to 300%: lack of observability hits companies in LATAM

The cloud has established itself as the great promise of elasticity and efficiency for enterprises. But when the bill arrives, CFOs and CTOs face an uncomfortable question: can they prove with data what they consumed, who used it and what value it generated? In most cases, the answer is no. This evidence gap is not technical: it is financial-operational. Without deep observability, there is no traceability of spend and no control of total cost of ownership (TCO). And the impact is so great that, according to Flexera's State of the Cloud Report 2024, managing cloud spending is the number one challenge for global organizations, ahead of even security.

27% of cloud spending is wasted

Flexera estimates that companies waste on average 27% of their cloud spend. The list of leaks includes:

  • Oversized instances that never operate at full capacity.
  • Inactive storage that no one reviews or debugs.
  • Development or test environments that remained active “forever”.
  • Orphaned services surviving after migrations or pilots.

The conclusion is clear: the cloud is not expensive; what is expensive is not seeing it.

Downtime: the other hidden cost

The problem is not just overpaying for idle resources. Downtime multiplies losses. A report by Splunk and Oxford Economics estimates the cost of Global 2000 downtime at $400 billion annually. On average, each large company loses US$49 million in revenue and pays US$22 million in regulatory fines for failures. In sectors such as retail, banking and logistics, every minute without service is a domino effect.

Where the money really goes

Without observability there is no FinOps. Having savings policies or capacity commitments is not enough if you do not see in detail what you consume, when and with what impact. The main leaks:

  • Chronic oversizing: unlimited autoscaling, premium instances where standard was sufficient.
  • Invisible storage layers: legacy snapshots, legacy buckets with no life cycle.
  • Environments that no one governs: dev/QA that become permanent.
  • Multi-cloud without tagging: no tagging or showback, numbers are not assigned to products or equipment; trimming is horizontal and unfair.
  • Generative AI on perpetual pilot: unpredictable peak loads and volatile costs.

LATAM photography: accelerated adoption, weak control

More than 80% of companies in Latin America already operate with cloud services. The region leads in growth – close to 30% per year, according to IDC – but speed does not always come with maturity.

Three factors explain why the bill is more inflated here:

  1. Uneven connectivity and digital last mile: optimizations without real experience metrics lead to overpaying.
  2. Fragmented regulatory processes: duplicating data “just in case” generates unnecessary costs.
  3. Hybrid multicloud operation: without observability, spending is spread across multiple providers.

In LATAM, the cloud is growing, but without governance of spending, bills become unpredictable.

From evidence to action

Data shows that observability returns tangible financial value. New Relic (2024) reports that companies with full-stack observability achieve a median ROI of 4×, with 79% less downtime and 48% lower downtime costs; in retail, ROI scales to 302%. Deloitte estimates that with mature FinOps and observability, companies can reduce their cloud costs by up to 40%, representing US$21 billion in global savings by 2025.

The message for CFOs and CTOs is straightforward: observability is not a technical layer, it is a financial lever.

In simple numbers: a company that spends US$36 million a year on cloud can lose US$9 million a year in waste alone (Flexera). If you add FinOps practices + observability, that hole can be closed by 30-40%. In parallel, every minute of downtime avoided frees up additional millions. The equation is not technical: it’s business.

How to do it matters as much as what. The market offers robust tools-Datadog, New Relic, Splunk, Grafana Cloud, Lightstep-but the difference is not in the platform, but in the operational integration: reliable tagging, critical path traceability, financial KPIs and automated decisions to shut down, adjust or degrade loads. User experience observability (RUM, synthetics) is just as critical as infrastructure: it shows you where to save without hurting conversion.

And waiting is not an option. IDC projects that global cloud spending will double by 2028; in Latin America, adoption is already in the majority. Delaying observability and FinOps does not save: it makes it more expensive. Every month without control adds up to technical and financial debt. And when a downturn occurs, the bill reminds you: US$400 billion a year in global losses proves it.

Conclusion: observability, the new financial control of the cloud

The cloud will continue to be the driver of digital transformation, but without observability, it will also remain a black hole in finance.

At Factor IT we help companies in the region analyze their specific cases, identify real savings opportunities and share proven use cases that turn observability into a financial enabler.

Because every percentage point recovered today is millions available for your next innovation cycle.

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