IT spending has undergone a paradigm shift from traditional sources to Cloud computing, according to a report released by the world’s leading information technology research company Gartner. Quantifying the shift, the report says that IT will spend more than $1 trillion in IT spending directly or indirectly due to the shift to Cloud during the next five years. This will make Cloud computing one of the most disruptive forces of IT spending since the early days of the digital age.
“Cloud-first strategies are the foundation for staying relevant in a fast-paced world,” said Ed Anderson, research vice president at Gartner. “The market for Cloud services has grown to such an extent that it is now a notable percentage of total IT spending, helping to create a new generation of start-ups and ‘born in the Cloud’ providers.”
According to the report, IT will spend $111 billion on Cloud services this year, which will grow to $216 billion by the year 2020. The shift translates to a total of $1 trillion over the next five years. The shift is greatest in the business process as a service (BPaaS) segment, with the shift amounting to $42 billion at the rate of 43% through 2020. The software as a service (SaaS) segment follows closely, registering total Shift of $36 billion in 2016 at the rate of 37% through 2020.
“The mere fact that Cloud spending is increasing at a rate is not surprising at all. Every analyst group has been pointing it out for more than three years, but the Gartner report computes the shift in terms of the IT budget more exactly than was done before,” said Shashank Dixit, CEO, Deskera, a leading Cloud-based business software company in the Asia-Pacific region.
Besides the direct effects of the shift, many markets will be affected indirectly. Identifying indirect effects can help IT asset and purchasing managers ensure they are getting the best value out of new expenditure and are protected against risk, as well as assisting them to exploit the new opportunities caused by Cloud shift.
For example, instead of buying operating systems (OSs) for each user in the traditional way, many will be provided as OS images — particularly with the use of containers for next-generation applications. Another example is that enterprise storage needs could be met with a lower upfront cost and far more scalability by switching to Cloud solutions instead of buying dedicated hardware.
“Cloud shift is not just about Cloud. As organizations pursue a new IT architecture and operating philosophy, they become prepared for new opportunities in digital business, including next-generation IT solutions such as the Internet of Things,” said Mr. Anderson. “Furthermore, organizations embracing dynamic, Cloud-based operating models position themselves better for cost optimization and increased competitiveness.”