For years now, vendors and analysts have been telling us that companies’ move to the cloud was happening and we were on the verge of a huge uptick in cloud usage. According to recent studies, that day is finally here.
While user interest research has been indicating that support for the cloud is increasing, reports now show hard numbers indicating that organizations are putting their money where their mouths are: They’re spending more in operational expense, and less in capital expense, reports Computer Economics in its report 2015/2016 IT Spending & Staffing Benchmarks.
“We are starting to see the effects of a transition to the cloud,” the report states. “We expect the transition to accelerate operational spending while depressing capital spending. This seems to be happening. We also anticipate that cloud computing will deliver real value to enterprises in lower cost of IT and higher service levels. The data is indicating that the cost of IT is declining on a per-user basis and as a percentage of revenue.”
For example, Computer Economics’ findings show that 56 percent of IT organizations are currently increasing spending on cloud applications, compared with only 10 percent that are increasing spending on data center infrastructure.
Interestingly, IT spending as a percentage of revenue has dropped since last year from 2.5 percent to 2.3 percent. This could mean that IT spending will rise in the near future. “Another possibility is that the transition to cloud technology is beginning to pay dividends and IT is becoming more efficient,” Computer Economics writes optimistically.
In the specific case of government, the federal government led the way in 2010 by declaring a “cloud first” policy, writes Forbes in its report, From Promise to Reality: How Local, State and Federal Government Agencies Achieve Results in the Cloud. For example, enterprise software firm Deltek’s Federal Industry Analysis predicts a 21 percent compound annual growth rate in federal spending on cloud, reaching $6.5 billion by 2019, according to the report. In addition, public sector cloud is predicted to account for more than half of global software, server and storage spending growth by 2018, the report cites IDC as saying.
In addition, this emphasis on the cloud has trickled down to state and local governments as well, Forbes writes. “What began as a national policy initiative is now cascading, not merely at the federal level but also into the practices of numerous state and local jurisdictions,” states the report. “Indeed, a growing number of state CIOs have implemented cloud-first policies of their own.”
Sales figures are backing this up, according to a recent IDC study. “Just before the Independence Day holiday, research firm IDC released its assessment of the Worldwide Cloud IT Infrastructure Market—and the numbers were astonishing,” writes Fredric Paul in Network World.
- Server, storage, and Ethernet switch revenue for public and private cloud systems grew by 25.1 percent year over year to nearly $6.3 billion in the first quarter of 2015
- The percentage of total IT infrastructure spending devoted to the cloud grew to nearly 30 percent, up from 26.4 percent a year ago.
- Private cloud revenue jumped 24.4 percent to $2.4 billion
- Public cloud grew even faster, up 25.5 percent to $3.9 billion
- Servers led the way, up 28 percent for the private cloud and 33 percent for the public cloud
In comparison, non-cloud IT infrastructure increased by only 6.1 percent, primarily due to server sales, Paul writes. “Non-cloud Ethernet switch sales ticked up just 1 percent, while storage sales actually declined.”
Altogether, cloud spending now accounts for a third of all IT infrastructure spending.
In addition, IDC predictions for the IT infrastructure market show a steady decline in traditional IT through 2019, the end of the study period, with commensurate increases in public and private cloud instead.
That’s not to say, of course, that the traditional datacenter is going away. “It will take a long time before cloud becomes the dominant architecture in terms of revenues,” writes Timothy Prickett Morgan in The Platform, of the IDC results.
“At the end of the forecast period , public cloud spending on this gear will crest to $35.3 billion and private cloud spending will hit $19.2 billion, and together they will account for 46.5 percent of overall core infrastructure spending.”
So if your mom was always telling you to get your head out of the clouds? She was wrong. Sorry, Mom.
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