It’s surprising that with so much talk about the cloud, there are still some in business who are confused by the concept. They understand that they no longer need to keep things on-premise, but that may be where the familiarity ends and the confusion begins. Still, the promised benefits for operations in the cloud are extensive and spending for the enterprise cloud is expected to skyrocket.
In fact, according to a recent Information Week post, Gartner (News - Alert) is projecting a $1 trillion shift in enterprise cloud spending over the next five years. This year alone, it’s expected that IT will spend roughly $114 billion, growing to $216 billion in 2020. The transition is taking place at a rate of 2 percent per year as the enterprise data center is being slowly replaced by the public cloud.
Companies are definitely seeing the benefits associated with the enterprise cloud, even as initial fears kept widespread adoption at bay. According to Gartner’s report, the $1 trillion shift is positioning cloud computing as one of the most disruptive forces of IT spending since the early days of the digital age.
In large part, enterprise decision makers are no longer hesitant to move data outside of their firewalls or suspicious of third party security measures. This is now allowing companies to adopt the cloud approach to doing business, storing data and managing processes, realizing the benefits associated with no on-premise investments. At the same time, as legacy systems continue to age, it only makes sense to shift the focus away from capital investments so as to reduce overall up-front spending.
"The market for cloud services has grown to such an extent that it is now a notable percentage of total IT spending," said Ed Anderson, Gartner research vice president and author, along with analyst Michael Warrilow, of "Market Insight: Cloud Shift -- The Transition of IT Spending from Traditional Systems to Cloud." The report suggests that cloud spending will represent 24 percent of the IT budget by 2020.
Young companies and the startup set are certainly driving much of this growth in IT enterprise cloud spending. The low investment definitely fits better with their smaller budgets, and it allows them to compete on a much bigger playing field. Those larger competitors who still resist the cloud down the line may find that they can’t be as agile as their smaller counterparts. When this happens, we may start to see a shift in the market that will change the rules of the game.