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Ten percent of external IT spend shifts to the cloud - Gartner

22 September 2010  |  2499 views  |  0 Source: Gartner

Cloud-computing services consumed from external service providers (ESPs) are estimated to be 10.2 per cent of the spending on external IT services, according to a worldwide survey by Gartner, Inc.

From April through July 2010, Gartner surveyed 1,587 respondents in 40 countries to understand general IT spending trends and spending on key initiatives such as cloud computing. Participants were IT budget management professionals (CIOs, IT VPs, IT directors, IT managers, etc.). Four hundred eighty-four respondents participated in the drill-down on cloud computing and were asked how their organisation's current budget for cloud computing was distributed, as well as what their estimate was for spending next year.

"The cloud market is evolving rapidly, with 39 per cent of survey respondents worldwide indicating they allocated IT budget to cloud computing as a key initiative for their organisation," said Bob Igou, research director at Gartner. "One-third of the spending on cloud computing is a continuation from the previous budget year, a further third is incremental spending that is new to the budget, and 14 per cent is spending that was diverted from a different budget category in the previous year."

Forty-six per cent of respondents with budget allocated to cloud computing indicated they planned to increase the use of cloud services from external providers. Gartner analysts said there is a shift toward the "utility" approach for noncore services, and increased investment in core functionality, often closely aligned with competitive differentiation.

More respondents expected an increase in spending for private cloud implementations that are for internal or restricted use of the enterprise (43 per cent) than those that are for external and/or public use (32 per cent).

"Overall, these are healthy investment trends for cloud computing. This is yet another trend that indicates a shift in spending from traditional IT assets such as the data centre assets and a move toward assets that are accessed in the cloud," said Mr Igou. "The trends are good news for IT services providers that have professional services geared to implementing cloud environments and those that deliver cloud services. It is bad news for technology providers and IT services firms that are not investing and gearing up to deliver these new services seeing an increased demand by buyers."

On a regional basis, Asia/Pacific, Europe, the Middle East and Africa (EMEA), and North America spent between 40 and 50 per cent of the cloud budget on cloud services from ESPs. Latin America was the exception, with a notably larger portion of budgets being spent on developing and implementing private and public cloud environments, reflecting the need to cater to the close business relationships and high-touch interactions that are characteristics of the Latin culture.
"Cloud-based IT services are evolving fast and differently in the countries and regions surveyed. Service marketing managers for IT services providers must be monitoring the contract value and intentions of customers for their service lines and cloud service offerings at the country and regional levels of their operations," said Mr Igou. "Demand is shifting from traditional proprietary and highly customised assets to ubiquitous assets that are accessed by customers. Service marketing and service delivery managers need to lead the curve of investment in the skills and capabilities of their service offerings, which means investing before having contracts."

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