News

Research: Enterprise Spending Shifting to Cloud

• By David Ramel
• 05/03/2017

451 Research is out with a new report examining IT budget trends, finding that spending on cloud services and managed hosting is increasing faster than enterprise spending overall.

As might be expected, the study finds the Microsoft Azure and Amazon Web Services Inc. (AWS) clouds are being adopted by the largest percentage of respondents to its survey, though nearly half are going with a provider outside of the top 10 industry leaders.

451 Research today listed those findings and more in publicizing its recent for-pay report, "Voice of the Enterprise: Hosting and Cloud Managed Services, Budgets and Outlook."

Various other reports usually indicate AWS is the definite cloud leader, with Azure being its main rival, experiencing faster growth in some areas and more market penetration in certain niches. 451 Research found much the same.

"Azure and AWS lead respondents' budget allocation by a significant margin, with Azure (24.8 percent) leading AWS (20.2 percent) by several percentage points," 451 Research said in a statement today. "Respondents on average intend to increase spending for both of these vendors. And increased spending is also planned with several other vendors, including public cloud and managed hosting vendors in aggregate.

"However customers' plans to increase spending for any individual vendor trail hosting and cloud spending increases overall, suggesting that over time enterprises will spread their growing hosting and cloud services budget over a larger number of providers."

The main factors in driving organizations to increase their cloud/hosting spending vary by company size, the researcher said. Overall, those drivers include:

• The migration of workloads from on-premises environments to the cloud
• Adding new resource capacity due to business growth
• New IT initiatives
• Businesses buying additional services they previously didn't have

Interestingly, the "migration of workloads from on-premises environments to the cloud" factor is somewhat tempered by another recent report from Uptime Institute that found, despite the overall trend of moving operations to the cloud, "the vast majority of enterprise IT workloads are hosted in enterprise-owned and colocation datacenters."

The 451 Research study also found those aforementioned driving influences aren't spread evenly across the spectrum of responding organizations.

"These drivers vary significantly by company size, with small businesses (up to 249 employees) strongly emphasizing new capacity due to growth, and medium (250–999 employees) and very large businesses (over 10,000 employees) primarily focused on migrating on-premises workloads to the cloud," 451 Research said.

Overall spending trends are also influenced by company size. Cloud/hosting spending is expected to outpace the rate of overall IT spending by 12 percent to 25.8 percent. "This trend applies across almost every vertical market and company size category, but is most pronounced among large businesses (1,000-9,999 employees), which expect an average of 33.3 percent growth in hosting and cloud services spending," the research firm said.

451 Research said its report was based on research conducted in January and February of this year with about 1,000 IT pros around the world, combined with survey responses and in-depth interviews from more than 60,000 senior IT buyers and enterprise technology executives.