CXO

Why cloud may ease the pressure for CIOs feeling the financial squeeze

Flat IT budgets will give CIOs little room to manoeuvre, according to analyst house Gartner, which suggests cloud services might be IT leaders' best option for affordable change.

CIOs are caught in a trap between flat IT budgets and the need to keep up with competitors using cloud services to drive rapid business change, according to analyst house Gartner.

IT spending worldwide will drop 0.5 percent to $3.49tr in 2016, compared to the year before, the report by Gartner predicts. For CIOs, IT budgets will stay largely static in the year ahead, said John-David Lovelock, research vice president at Gartner and report author.

So what's the best course of action for CIOs faced with the need to do more without additional resources? According to Lovelock, they should start assessing where it is appropriate to make greater use of public cloud and other on-demand services.

"[They should ask] is it time to rebalance your infrastructure with infrastructure-as-a-service? Is it time to move some of the things you're doing to a platform as a service offering, so rather than BI get a BI platform. Is it time to rebalance licensed software with cloud or subscription software?"

Enough companies are already starting down this path that not to consider as-a-service offerings is to miss out on the opportunity to alter cost structures and more rapidly change business processes, he said.

"The only way they're going to get there in this cost-constrained environment is a shift towards cost-optimisation. Both IT cost optimisation and business cost optimisation."

Public as-a-service offerings can help realise these optimisations by allowing services and infrastructure to be scaled up and down on demand and by lowering upfront costs due to not having to make a large capital outlay on infrastructure — which in turn can help provide a low risk way for companies to experiment with IT-dependent products and services.

One caveat, is the long-term costs of running a public cloud service can often be higher than an on-prem alternative, so companies may want to continue running fairly static, predictable IT workloads in-house. However, as-a-service offerings also offer additional benefits, said Lovelock.

"The cost savings you get in the first few years offset it and again we're in a fail fast mode, so we don't know that everything we're doing will survive to the point of needing a long-term solution."

Lovelock's expectation of flat IT spending stems from economic uncertainties brought on by global currency fluctuations, he said.

"There is an undercurrent of economic uncertainty that is driving organizations to tighten their belts, and IT spending is one of the casualties," he said.

About Nick Heath

Nick Heath is chief reporter for TechRepublic. He writes about the technology that IT decision makers need to know about, and the latest happenings in the European tech scene.

Editor's Picks

Free Newsletters, In your Inbox