Enterprise IT leaders are entering 2025 with a strong focus on innovation but a need for cost-effective strategies. While AI’s transformative potential makes it a top priority for almost half of IT leaders, its steep costs add pressure for organizations to demonstrate a return on investment quickly.

A recent Flexera report, based on responses from over 800 IT executives, reveals that while AI implementation is a primary focus, managing cloud costs and reducing IT spending remain critical. Notably, cloud spending still consumes a large portion of budgets, as organizations seek to balance cutting-edge capabilities with disciplined financial management.

The study emphasizes that the rapid evolution of generative AI has captured business leaders’ attention, but it requires considerable investments. Executives also face challenges in showing short-term returns on AI projects, with nearly a third expected to be abandoned post-pilot stage. Hyperscale cloud providers, AWS, Microsoft, and Google, have significantly increased their infrastructure investments to support growing AI demand, securing them a prominent role in IT budgets.

These findings, highlight how CIOs can align technology investments with organizational objectives amid ever-changing demands.

Prioritizing AI for Competitive Advantage

Artificial Intelligence is emerging as a key driver for innovation and efficiency in 2025.

The report shows an 11-point increase in the number of CIOs prioritizing AI since 2024, with 47% of respondents naming it as their top focus. AI is expected to revolutionize business functions by enabling operational automation, predictive analytics, and enhanced customer personalization.

Key areas of AI focus include:

• Operational Automation: AI-driven automation reduces costs, improves accuracy, and minimizes labor-intensive tasks.
• Predictive Analytics: Leveraging AI for data analytics, businesses gain insights to make proactive decisions and optimize strategies.
• Customer Personalization: Customized interactions driven by AI foster customer loyalty and improve engagement.

However, scaling AI presents challenges. According to the report, nearly 30% of pilot AI projects are abandoned before full deployment, highlighting the importance of skills development and ROI justification. As CIOs work to secure measurable returns, 48% of leaders cited skill shortages as a key barrier, underscoring the need for targeted training initiatives and partnerships to build AI capabilities.

Cloud Costs and FinOps: The Need for Fiscal Discipline

Cloud computing remains foundational to enterprise IT, but it’s also a significant budgetary burden.

With 71% of Flexera respondents indicating that cloud expenditures heavily impact budgets, cost management has become an urgent priority. To address these pressures, many companies are adopting FinOps (financial operations) practices to optimize cloud spending while retaining agility.

FinOps practices focus on:

• Usage Transparency: Cloud monitoring tools give teams detailed insights into resource consumption, enabling better planning and accountability.
• Cost Optimization: Rightsizing resources and identifying underused assets are key practices to reduce waste.
• Departmental Accountability: Cross-departmental engagement helps ensure that spending aligns with organizational objectives.

Despite its potential, FinOps maturity varies widely, with only 41% of organizations reporting advanced FinOps practices. Flexera’s findings suggest that by embedding FinOps across departments, CIOs can gain better financial control while maximizing cloud benefits.

Vendor Consolidation and Strategic Partnerships

Amid budget constraints, enterprises are increasingly consolidating vendors to manage complexity and costs.

Flexera’s report highlights a trend toward consolidation with leading cloud and AI providers, favoring vendors that offer broad functionality. Microsoft remains the top vendor choice, used by 64% of respondents, due to its extensive AI integrations and cloud capabilities.

Google Cloud and OpenAI have also seen notable growth, with 50% and 37% of companies respectively listing these providers as top partners. This consolidation enables:

• Simplified IT Management: Fewer vendors streamline tech stack management and reduce administrative demands.
• Deepened Partnerships: CIOs are focusing on strong vendor relationships that facilitate co-development and flexible terms.
• Improved Cost Control: By centralizing with a few key providers, organizations can eliminate redundancies and better negotiate pricing.

This shift in vendor priorities reflects the growing appeal of AI-powered tools, such as coding assistants and natural language interfaces, as companies seek comprehensive solutions that support long-term strategy and scalability.

Reinforcing Cybersecurity Within Budget Constraints

Cybersecurity is essential but often costly, and Flexera’s report shows that IT leaders are adopting creative strategies to protect data while managing resources.

As threats increase, 25% of respondents list cybersecurity risk management as a top priority, focusing on advanced tools that minimize human intervention and improve efficiency.

To address cybersecurity needs with leaner budgets, organizations are emphasizing solutions that provide:

• Automated Threat Detection: AI-driven tools detect threats in real-time, helping teams respond more quickly and accurately.
• Identity and Access Management (IAM): Secure, identity-based access reduces the risk of breaches by ensuring only authorized users access sensitive data.
• Compliance Management: With regulatory demands rising, tools that support audits and ensure data privacy are becoming indispensable for maintaining global compliance.

The report emphasizes the importance of cybersecurity tools that support lean IT teams while maintaining high security standards. By investing in automation and compliance-ready solutions, organizations can protect assets efficiently, even with constrained resources.

“If 2024 was the year of experimentation, 2025 will be the year to double-down on what proved valuable in 2024.”

Managing SaaS Growth and Controlling Shadow IT

Cybersecurity is essential but often costly, but IT leaders are adopting creative strategies.

The surge in Software as a Service (SaaS) usage has introduced both flexibility and new challenges, such as SaaS sprawl and shadow IT. Flexera’s report indicates that managing SaaS subscriptions is a key cost control area, as unchecked growth leads to higher expenses and potential security risks.

To manage SaaS effectively, CIOs are focusing on:

• SaaS Management Platforms: These tools allow visibility into SaaS usage, helping IT leaders identify redundant applications and streamline subscriptions.
• Cross-Departmental Collaboration: By aligning teams on approved applications, CIOs reduce unauthorized software use and ensure SaaS investments are strategically aligned.

With 27% of respondents prioritizing IT cost reductions, stronger SaaS governance has become an important tactic to streamline spending and maintain a secure, compliant IT environment.

The Wrap

Flexera’s 2025 IT Priorities Report sheds light on the strategic challenges and goals for CIOs in the year ahead.

As IT leaders focus on AI, cloud cost management, vendor partnerships, and cybersecurity, the report underscores the importance of strategic alignment and financial discipline. Executives are emphasizing the need for measurable returns on new technologies as financial pressures and demands for transparency continue to grow.

In 2025, CIOs face the challenge of delivering innovation without overextending budgets, with priorities that balance cutting-edge solutions and disciplined cost management.

Success will depend on a CIO’s ability to optimize spending, engage in strategic vendor partnerships, and align technology investments with business goals. This alignment is critical for sustainable, resilient growth as organizations adapt to a rapidly changing technology landscape.