AI is bankrupting your cloud budget. Here’s what savvy bizs are doing instead.

[This is a sponsored article with Synology.]

The cloud was supposed to eliminate infrastructure headaches. Instead, some businesses are discovering a new one: invoices they no longer understand.

Storage fees, data retrieval charges, and backup costs are quietly pushing cloud spending higher than many organisations anticipated—and artificial intelligence (AI) is about to make it significantly worse. 

It’s a challenge Taiwanese storage company Synology has been watching closely. 

At Computex 2026 in Taipei last week, the company argued that the economics of cloud-first infrastructure are beginning to shift.

The cloud bill that keeps growing

Businesses that moved enthusiastically to cloud-first infrastructure in the early 2020s are now sitting with bills that look nothing like the ones they signed up for. As costs continue to climb, some are reassessing whether keeping more data on-premise could make better financial sense.

The main catalyst is artificial intelligence. 

AI doesn’t just store data—it constantly accesses, moves, and processes it. Every inference call, every model training run, every search query is pulling data in and out of storage.

Gartner forecasts that more than 80% of enterprises will have deployed AI-enabled applications by 2026. And in a cloud environment, every one of those activities comes with a price tag.

From the start, cloud storage has been largely marketed on a simple figure: storage cost per gigabyte. Amazon Web Services S3 Standard, for example, runs at roughly US$23 per terabyte per month, with Google Cloud and Microsoft Azure in a similar range. 

For many businesses, the math looked straightforward. But what’s less visible is everything layered on top of that base rate.

Every time data is retrieved or moved—something AI workloads do constantly—cloud providers charge additional fees. 

On AWS, data egress starts from around US$0.09 per gigabyte transferred out. At scale, even restoring a 10TB dataset can quietly add about US$700 to the bill, before factoring in anything else.

Add API requests, cross-region replication, and backup-related charges, the total cost can be pushed up to four times the advertised storage rate. 

A Backblaze survey of more than 400 IT leaders found that 95% encountered unexpected cloud storage costs. And according to the Wasabi Global Cloud Storage Index, which surveyed 1,600 IT decision-makers globally, including 525 across APAC, 63% of organisations in the region exceeded their cloud storage budget in 2024. 

Businesses are bringing data back in-house

Amid rising costs, cloud repatriation—bringing data and workloads back from public cloud providers onto private or on-premise infrastructure—has moved from a niche IT discussion to a mainstream business decision. 

A 2025 Barclays CIO survey found that 86% of enterprise CIOs planned to shift at least some workloads back to private or on-premise systems, the highest level recorded. The Flexera 2025 State of the Cloud report similarly shows that 21% of workloads have already been repatriated, even as overall cloud spending continues to grow.

However, it’s important to note that most organisations aren’t abandoning cloud wholesale. 

Instead, they are taking a hybrid approach by keeping cloud platforms for global accessibility and collaboration, while bringing back workloads that involve heavy storage, protection, and processing. Backup and production storage are among the most commonly repatriated, as these are the areas where costs scale most quickly.

For Singapore businesses, there’s another factor at play: regulation. Under MAS Technology Risk Management guidelines and PDPA obligations, companies are expected to know where their data is stored and how it is being accessed.

That becomes harder in large public cloud setups, where data can be spread across multiple regions and servers. On-premise systems, by contrast, make it easier to keep track of exactly where information sits and who has access to it, since everything is managed within a company’s own infrastructure.

What Synology is bringing to the table

Synology is one of the companies building for this shift. 

The firm is best known for its Network Attached Storage (NAS) hardware—physical devices that store data locally while still functioning as a private cloud. 

At Computex 2026, it outlined how it is expanding its NAS ecosystem beyond storage into AI-enabled data management and backup infrastructure.

At the centre of this push is Synology’s next-generation DiskStation Manager (DSM), the operating system that powers every Synology NAS device.

The Taiwanese firm has spent more than two decades building NAS hardware and software. Today, it has shipped over 14 million systems worldwide, managing more than 400 exabytes of data. 

AI that stays in-house

At Computex 2026, the company announced the roadmap for the next generation of DiskStation Manager, DSM Agent 2.0, expanding it from a storage operating system into an intelligent data platform for governed, on-premises AI workflows. The goal is to turn DSM from a storage system into a smarter data platform that can support AI tools running on a company’s own infrastructure.

Instead of sending data to external cloud services, businesses can use their own data, such as files, system logs, and usage data, to power AI tools internally, while keeping everything under their control.

“The next generation of DSM leverages over two decades of expertise to create an AI-ready platform that keeps organisations firmly in control of their data,” said Philip Wong, Chairman and CEO of Synology.

Some AI features available include a conversational assistant for troubleshooting and system management. More advanced AI agents are also in development, designed to handle tasks such as email drafting, formula searches, meeting transcription, and real-time translation, although no release date has been announced yet.

As these capabilities expand, privacy becomes even more important in the age of AI. The system already includes a feature that masks sensitive data such as names, ID numbers, email addresses, and financial information locally before anything is sent to external AI providers like OpenAI or Azure AI. 

Future updates will go further, with support for fully on-premise large language models, where no data needs to leave the organisation’s infrastructure.

Synology’s infrastructure is already at work in Singapore

The value of on-premise data infrastructure is already clear for Singapore businesses using Synology. 

Food chain I Love Taimei, which has 17 outlets in Singapore, uses Synology’s DSM system to manage surveillance footage across all locations. This cuts management time by 65% and also allows the company to run AI-powered customer analysis without sending footage to the cloud.

LASALLE College of the Arts also uses Synology NAS for file storage and 4K video collaboration, allowing students and staff to access large project files easily across Mac computers without compatibility issues or rising costs.

Together, these examples show why some organisations are rethinking the assumption that everything belongs in the cloud.

Cutting backup costs without the cloud

The same push toward more controlled, on-premise infrastructure also extends to backup. At Computex, Synology introduced ActiveProtect Manager 2.0, a centralised backup system that will launch in Q3 2026.

The key issue it addresses is cost. Most backup services charge per server, virtual machine, or device. ActiveProtect instead charges for the hardware, with no extra per-workload fees.

In some cases, customers have seen a lower total cost of ownership. For example, Taiwanese media company Info Times reduced setup costs by 65% and cut storage needs by 75%. Toyota also reduced its backup data by 75% through better storage efficiency.

ActiveProtect 2.0 works with existing systems, so companies don’t need to replace their current setup. It also uses machine learning to detect unusual backup activity and help prevent ransomware infections from being restored. 

And because everything is stored locally, recovery is faster—taking hours instead of days—and there are no cloud data transfer fees.

The bigger picture

Cloud still has an important role to play, whether for global access, extra computing capacity, or supporting teams across different regions.

What’s changing is that businesses are becoming more selective about what they keep in the cloud. Rather than moving everything to a single platform, many are deciding where data should live based on cost, performance, and compliance requirements.

For Singapore businesses that have quietly accepted rising cloud bills as part of the cost of doing business, it may be time to take a closer look at the numbers.

Explore Synology’s solutions here. 

Featured Image Credit: Synology