451 Research report affirms cloud services budget to outstrip overall IT this year

Enterprises expect growth in their hosting and cloud services to outstrip overall IT spending this year, with spending on hosting and cloud to go up 25% on average compared to 12% for overall IT, according to 451 Research.

The findings, which appear in the company’s latest Voice of the Enterprise report, show that the trend is most pronounced in larger businesses. For organisations with 1,000 to 9,999 employees, spend on hosting and cloud is expected to rise 33% compared to only 7.3% for IT overall. For organisations with more than 10,000 employees (20.3% and 5.8%) a similar pattern occurs.

88% of respondents overall expect their hosting and cloud services budgets to go up in 2017 compared to last year, with only 70% expecting their total IT budget to rise.

“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,” said Liam Eagle, research manager at 451 Research and report author. “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 research argues various factors are impacting the increased adoption of cloud and hosted services, from new IT initiatives, adding resource capacity due to business growth, and, naturally, migrating workloads from on-prem environments to the cloud.

Azure, cited by almost a quarter (24.8%) of budget allocation, leads Amazon Web Services (20.2%), with respondents expecting to increase their budget on both providers in the coming year. This was referenced in a study last month, where the research firm argued Azure was emerging as the ‘predominant primary infrastructure as a service provider in Europe’. Around half of respondents said they were using a vendor outside of the top 10 providers.

“Significant adoption profile differences among different company sizes in terms of adoption rates and drivers reinforce the idea that company size is not just a category difference, but indicative of markets with totally different hosting and cloud services characteristics,” added Eagle.

“This gives providers a compelling business case for specialisation and is one of the reasons the hosting and cloud services market is served by such a wide variety of vendors and vendor types.”

You can find out more about the report here.

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