Beyond Cloud First: Why Cloud Smart Is the Right Strategy for 2026

Remember the early days of cloud computing? Initially, the “cloud-first” approach was promoted as an innovation strategy. A lot has happened since. But today “cloud-first” is currently seen by many as a challenging budget problem. CFOs are asking:

• How much of our IT budget is spent just keeping the lights on?
• How much is wasted by improper cloud model selection and overspending?
• Do we have visibility into what’s being spun up, the costs, and expected outcomes?
• What AI and regulatory risks are we taking for minimal gains?

Supporting these concerns, the industry-wide trends are troubling. About 32% of IT budget is wasted on hyperscale cloud, and 60-80% is wasted on legacy apps.^1,2 Meanwhile, 80% of tech-buying teams report post-purchase regret in one form or another.³

Why is cloud falling short for so many? Organizations are defaulting to hyperscale or DIY workloads, even if it isn’t always the optimal approach. Instead of “cloud-first,” today’s businesses need to consider a “cloud-smart” strategy that balances workloads across private cloud, colocation, edge, and hyperscale for optimal ROI and outcomes.

The Problem with Cloud-First Strategies

While cloud-first thinking enhanced agility, it also led to chaos due to unpredictable workloads, poor performance, and incompatible architectures – resulting in inefficiencies and misaligned application designs.

Hyperscale Cost Became a Business Problem, Not an IT One

Spending on legacy systems and uncontrolled cloud use eats budget on, prompting companies to reconsider hyperscale deployments exclusively. For steady, predictable workloads, Expedient’s model shows a private cloud can be 30% less expensive.⁴

Many Legacy and Monolithic Apps Don’t Perform Well in Hyperscale

Traditional stable-state workloads, databases, and non-cloud-native workloads often run faster in a private cloud designed for persistent performance. In a private cloud, they avoid hyperscale resource contention through dedicated resources, which cost a hefty premium in hyperscale clouds.

Businesses Learned the Hard Way That Elasticity Isn’t Free

Elastic scalability is only beneficial for applications that require it when needed. Many workloads are predictable, not spiky. Over-provisioning and paying extra for workloads that act like fixed infrastructure and don’t take advantage of hyperscale flexibility wastes OpEx.

Hyperscale Support Is Not Built Into Costs

Support on hyperscale platforms is limited, while premium support options are prohibitively expensive except for large enterprises. For mission-critical apps, businesses must buy expanded support or build internal capabilities to ensure continuity and resolve issues. Additionally, support from hyperscale providers may come from outside of sovereign borders, raising data privacy and security concerns.

Downtime Still Happens

Interruptions cost companies hundreds of thousands to over a million dollars per hour. Limited support raises questions: Do they understand your environment? Can they identify impacted systems and prioritize remediation?

Data Gravity Became an Architectural Constraint

Large datasets are expensive to move. They’re also subject to residency requirements due to their intrinsic sensitivity and privacy. Hyperscale egress pricing hampers operational dexterity, prompting many to choose private clouds in-order to cut costs and manage data. Public cloud is certainly a powerful and useful platform, but not for all tasks and workloads.

Why Cloud Smart Is the Strategy for 2026

The cloud-smart approach shifts strategy from location-based to outcome-driven, ensures compliance and addresses regulatory requirements. Businesses now evaluate workloads based on cost, performance, compliance, risk, and AI readiness, reflecting The Great Rebalancing as organizations reassess their infrastructure. Cloud-smart strategy is a response to this change.

Reduce IT Spending for Keeping the Lights On

To address the sizable amounts of IT budget wasted on maintaining legacy applications, cloud-smart strategies aim to redirect spending from maintenance to innovation:

• Reduce keep-the-lights-on costs by 30-50% over 24 months by shifting to managed private cloud, colocation, and disaster recovery as a service (DRaaS) instead of refreshing hardware and stacking more tools.⁵
• Optimize by blending services. Expedient sees approximately 64% of customers use both colocation and cloud together to maximize ROI on existing hardware while exiting data centers at lower risk.⁶

The shift to a fully managed service means that budgets previously allocated for maintenance can now be reassigned to innovation without increasing the overall budget.

Gain Visibility Into Cloud ROI

Today, about 27% of organizations report at least some waste in public cloud, and 49% believe more than a quarter of their public cloud spend is wasted.^7,8

Cloud-smart strategies aim to optimize steady-state, predictable workloads in a private cloud model that is up to 30% cheaper than hyperscale.⁹ Only elastic and cloud-native workloads are prioritized for hyperscale, where the elasticity premium has a clear business case.

Expedient Intelligent Infrastructure is built for precisely this kind of rebalancing: zero data transfer fees, resource pool optimization, and predictable monthly billing with a 100% uptime infrastructure SLA. As a result, finance teams can finally treat cloud as a forecastable expense instead of a surprise invoice.

Optimize AI Workloads for the Right Environment

In 2025, there’s a clear signal on where AI is going to run. And most of the time, it’s in a private cloud. 56% of organizations prefer private cloud for AI model training, tuning, and inference due to security and cost control, and 55% are already running generative AI in private cloud, especially for inference and RAG.¹⁰

However, a new risk has arisen in the workplace, as staff use public AI tools and potentially expose confidential business data. IT faces the challenge of imposing governance measures to protect company information. 57% of enterprise employees admit to entering high-risk information into public generative AI tools, while 68% of employees using public generative AI do so through personal accounts outside enterprise controls.¹¹

The goal of cloud-smart AI workloads is to place AI processes alongside relevant data in environments that ensure sovereignty and stable performance. The Expedient AI CTRL Platform runs directly in the Expedient Private Cloud, offering organizations a controlled way to implement AI without moving sensitive data to public services or starting from zero.

Avoid Downtime and Gain Resilience

Outages and ransomware are now treated as financial problems, not just IT events. Downtime averages $300,000 per hour for 90% of firms.¹²

A cloud-smart strategy reduces downtime risk by replacing expensive secondary sites and vulnerable disaster recovery plans with managed DRaaS and a distributed private cloud. Expedient offers disaster recovery capabilities and core infrastructure with a 100% uptime infrastructure SLA and unlimited guided disaster recovery testing, allowing teams to prove recoverability rather than depend on hope. This results in fewer outage hours, reduced financial risk, and improved insurance standing.

How Expedient Enables the Cloud-Smart Future

Expedient’s approach enables a cloud-smart strategy by following our Stabilize, Optimize, Modernize framework:

1. Stabilize means effectively addressing challenges, such as VMware licensing implemented by Broadcom, persistent technical debt, or AI security concerns.
2. Optimize involves placing workloads in optimal environments based on cost, governance, and performance.
3. Modernize promotes the use of AI workflows and automation for improved business results.

This approach offers a clear roadmap without requiring mass replacement.

Cloud First Is Out. Cloud Smart Wins in 2026.

Cloud success in 2026 belongs to the businesses that think strategically about infrastructure, not emotionally or reactively. By embracing a cloud-smart approach, organizations enable:

• Lower and more predictable costs
• Better performance for critical apps
• Stronger governance and compliance
• Reduced technical debt
• Faster AI adoption
• A flexible, future-proof hybrid model

While cloud-first was the opening chapter in the Cloud Era, the cloud-smart approach is the operating model for the next decade. Find out more about how Expedient Private Cloud can help enable it today.

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