Multi-cloud was insurance in 2023. You diversified to avoid lock-in, leverage competition, and get the best tool for each job.
But in Q4 2025’s cost-conscious climate, your engineering teams now spend 20-30% of capacity bridging clouds.
Cloud providers now give deeper discounts for committed spend. Splitting workloads across three clouds costs more than committing it to one. Hiring for multi-cloud expertise takes more than 6 months.
When does insurance become too expensive?
In this edition, I’ll walk you through three consolidation decisions mid-market teams are making right now.
Stay updated with Simform’s weekly insights.
Whether to consolidate at all
What this decision entails
Should you consolidate 80%+ of workloads onto one primary cloud, or maintain your current multi-cloud setup?
Nuances and trade-offs
- Engineering tax is real but invisible. Multi-cloud teams spend 20-30% of their time on integration glue, duplicate monitoring, and cross-cloud debugging.
That’s $150K-$300K in opportunity cost annually per 10-engineer team.
- Volume discounts reward commitment, not diversification. Cloud providers offer 50-75% off for committed spend. Splitting $9M across three clouds gets mid-tier discounts on each.
Committing $9M to a single cloud unlocks enterprise-tier pricing, and savings can exceed 20-30% before operational simplification.
- But lock-in risk is real. If you consolidate to Azure and Microsoft raises prices 30% (like Broadcom did with VMware), you have fewer options. Does multi-cloud coordination cost more than insurance against lock-in?
Case in point
A mid-market manufacturer standardized on Azure for 90% of workloads, keeping only high-performance computing on AWS.
Results: Negotiated Microsoft Enterprise Agreement that increased discount rates by ~15% points (millions in savings), reduced cloud engineer job vacancies by focusing on Azure talent vs. searching for rare multi-cloud generalists, and 30% deployment frequency improvement by eliminating dual-pipeline overhead.
How can you decide
- Calculate engineering tax: What % of sprint capacity goes to multi-cloud coordination? If >15%, consolidation pays back solely in velocity.
- Model volume discount impact: Get quotes for 3-year EA committed spend scenarios. How much discount is unlocked by concentrating vs. splitting?
- Assess migration costs: Legacy apps tightly coupled to cloud services may not be worth migrating. Identify what moves vs. stays.
- Risk tolerance check: If the primary cloud raised prices 30% tomorrow, could you absorb it, or would you migrate anyway? If “we’d migrate anyway,” lock-in risk is already priced in.
Timing and sequencing
What decision do you need to take
When to pull the trigger on consolidation (wait for contract expiration vs. start now), and which workloads to move first vs. last (pilot low-risk, then scale to business-critical).
Nuances and trade-offs
Contract timing creates a trap. Many companies wait for cloud contracts to expire to avoid early termination penalties. But waiting 18 months costs you 18 months of operational overhead savings. Sometimes paying the penalty to consolidate sooner has better ROI.
VMware crisis is forcing timing. Broadcom’s 100-800% VMware price increases (effective 2024-2025) are pushing companies to consolidate faster than planned.
Many used “VMware on AWS/Azure” as hybrid glue; now that’s untenable, forcing migration to native cloud services. This external pressure is accelerating decisions that were “someday” into “this quarter.”
Pilot first, then scale. Moving everything at once is high risk. It is better to pick one product or workload cluster, consolidate it, measure outcomes (cost, velocity, reliability), and then expand based on the evidence.
Case in point
Bonterra migrated product by product over 8-10 months using their cloud provider’s migration acceleration program. Because 50% of engineers were already proficient in the target platform, onboarding was faster. They fully retired secondary clouds within one year, achieving 60% cost savings and 12x faster audit cycles.
How can you decide
- Map contract dates vs. exit penalties: Calculate monthly coordination cost. If it exceeds the early termination penalty divided by the months saved, start now.
- Identify forcing functions: VMware renewal coming? Security audit revealing multi-cloud gaps? Use these as catalysts.
- Pilot with lowest-risk, highest-value workload: Pick something that (a) isn’t business-critical, (b) has clear success metrics, and (c) shows ROI to fund complete migration.
- Set 6-12 month timeline: Well-executed consolidations often hit ROI within 12 months.
What to standardize vs. what to leave flexible
What this decision entails
After consolidation, how much do you lock down (golden paths, centralized tooling) vs. how much do you leave to team autonomy?
Nuances and trade-offs
- Consolidation without standardization wastes the opportunity. If every team still picks their own monitoring, CI/CD, and deployment approach (just on one cloud now), you’ve only fixed the pricing problem, but you still have a coordination burden.
- Tool sprawl drops naturally. Multi-cloud requires 4+ monitoring tools (one per cloud + cross-cloud). Single-cloud lets you retire 2-3 redundant tools, saving licensing costs and training time.
- But heavy-handed standardization kills innovation. Force every workload through rigid templates, and teams route around them or slow down. The balance is between opinionated defaults and clear exception paths.
Case in point
A regional financial services firm consolidated from two clouds to one. They reported 30% savings in cloud budget and improved deployment frequency by eliminating dual-pipeline overhead.
They standardized CI/CD and monitoring, but left teams free to choose specific services (serverless vs. containers) based on workload needs.
How can you decide
- Define “golden paths” for 80% of use cases: Standard templates for web apps, APIs, batch jobs. Teams use by default because they’re faster.
- Publish exception criteria: If your workload has X, Y, or Z characteristics, you can deviate from the golden path with approval.
- Measure adoption: Track % of new projects using golden paths. <60% = too rigid; >90% = nailed it.
- Retire tooling aggressively: Post-consolidation, eliminate redundant monitoring/cost/security tools. Budget savings fund migration.
If you’re managing three clouds and projects are taking longer than planned, the inefficiency is compounding quietly. Successful Q4 2025 consolidations make ROI-based decisions with 6-12 month timelines and post-consolidation standardization.
Simform’s Azure Migration Assessment helps you map workloads to optimal platforms and model TCO scenarios.
