Cloud

Cloud spend to outpace overall IT investment, report finds

The pace at which companies are investing in cloud and hosting services is growing at string rate. While the trend is happening in most companies, it's pronounced in larger enterprises.

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Image: iStockphoto/vovan13

Enterprise IT spending in cloud and hosted services will outpace the growth of general IT spending by 25.8% to 12%, according to a recent report from 451 Research.

451 Research's Voice of the Enterprise: Hosting & Cloud Managed Services was built on data from roughly 1,000 surveys completed by IT and cloud decision-makers worldwide, combined with 20 in-depth phone interviews. Bumps in cloud spending existed in almost all verticals, and across small, medium, and large companies. The trend was pronounced in large businesses, however, which expected their budget to grow by 33%.

Of those surveyed, 88% expect that their hosting and cloud budgets will see an increase in 2017 versus what they spent in the year prior. However, only 70% of respondents said that they would likely be increasing their general IT budget in 2017 vs. 2016.

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Not all businesses are on board for an increase in cloud spend, though. Some 9.5% of the survey respondents said they planned a decrease in their cloud budget. With 22.3% expecting a decrease in their overall IT spend, that means that some businesses will be decreasing their IT budget while increasing their budget for cloud and hosting services.

"We see the pace of investment in hosting and cloud services exceeding investment in IT overall, meaning hosting and cloud services are becoming a focus of IT investment, via both new projects and the migration of existing workloads," Liam Eagle, research manager at 451 Research and author of the study said in the release. "Even some businesses that are reducing IT spending overall are increasing hosting and cloud spending, meaning service providers should not overlook companies looking to reduce IT costs as prospects."

The growth in cloud spend is being driven by a host of factors, the report found. It's getting easier to migrate on-premise workloads to the cloud, which was a strong driver, along with needing the scalability of cloud for growing initiatives and businesses focusing on the cloud for new projects.

Small businesses, which the report identified as up to 249 employees, were primarily concerned with capacity in cloud use. Medium companies with 250-999 employees and large companies with over 10,000 employees were focused on migration.

"This gives providers a compelling business case for specialization and is one of the reasons the hosting and cloud services market is served by such a wide variety of vendors and vendor types," Eagle said in the release.

A large portion of the respondents had adopted bigger vendors like Microsoft Azure and Amazon Web Services (AWS), but 50% noted that they were using a cloud vendor that wasn't in the top 10, the report said. Because respondents were less concerned with increasing spending with a certain vendor than they were with boosting their budget on the whole, the report predicted that organizations "will spread their growing hosting and cloud services budget over a larger number of providers."

The 3 big takeaways for TechRepublic readers

  1. A report from 451 Research found that the rate at which companies are increasing their budgets for cloud and hosting services is growing at a faster rate than their overall IT budgets.
  2. Small businesses were moving to the cloud primarily for scalability and capability, while medium and large businesses were focused on moving existing workloads to the cloud.
  3. Microsoft Azure and Amazon Web Services were popular among respondents, but many were using small vendors, too.

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About Conner Forrest

Conner Forrest is a Senior Editor for TechRepublic. He covers enterprise technology and is interested in the convergence of tech and culture.

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