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Azure, AWS Have Most To Gain in Pandemic-Driven IT Spending

Cloud computing's Top 2, Amazon Web Services (AWS) and Microsoft Azure, are some of the biggest beneficiaries of the coming 2021 IT spending surge, driven largely by the increase in remote workers during the COVID-19 pandemic.

The recent "State of Tech Spend Report" by Flexera surveyed over 470 organizations across North America and Europe, ranging from 2,000 to over 10,000 employees, and found that nearly half (49 percent) expect to increase their overall spending on IT-related initiatives in 2021 compared to 2020. Over one in 10 surveyed expect that increase to be "significant."

Cloud initiatives stand to benefit greatly from that spending increase, with nearly half (48 percent) of respondents considering "cloud/cloud migration" as a top IT initiative, up from 40 percent in 2020. Unsurprisingly, many organizations (42 percent) have become more open to moving to the cloud since the pandemic began, with respondents planning to allocate a combined 30 percent of their budgets toward IaaS/PaaS/SaaS and just 24 percent to on-premises software.

In short, enthusiasm for public cloud is high in 2021. Among those surveyed, 71 percent expect to increase their public cloud spending this year by at least some degree. For 29 percent, that change will be "significant."

"Cloud promises to help businesses reduce costs, so it isn't surprising to see an increased interest in cloud technologies," Flexera said in its report. "Accelerating the move to cloud makes it easier for people to work from home. And it helps offset the negative impacts of revenue declines and budget cuts due to the cost reductions cloud can deliver."

AWS and Microsoft, the two leading cloud vendors in the market, stand to gain the most from the IT spending surge, though Microsoft has a significant advantage because -- unlike cloud-only AWS -- its offerings go beyond its Azure cloud platform to "touch virtually every part of the IT stack," according to Flexera. Nearly half of organizations (47 percent) spend the highest proportion of their IT budgets on Microsoft products, compared to 22 percent on AWS.

"Notably, AWS has enjoyed significant gains since 2020, when 19 percent of respondents named it as the first or second largest vendor," according to Flexera. "This year, at 34 percent, AWS pulled ahead of SAP and holds a clear lead over Oracle and Salesforce."

For 2021, 61 percent of organizations plan to increase their spending on the Microsoft Azure cloud, with 19 percent planning "significant" changes. Close behind is AWS, with 54 percent planning to increase their spending on the platform to some degree, 19 percent significantly so.

[Click on image for larger view.] Source: Flexera

Other findings from the Flexera report:

  • More than half (55 percent) of organizations plan to wind down their datacenters over the next two years, with 7 percent expecting to eliminate them completely.
  • When asked to list their Top 3 IT initiatives, the most common responses were "digital transformation" (56 percent), "cybersecurity" (50 percent) and "cloud/cloud migration" (48 percent).
  • "Work from home" was the most-cited (74 percent) pandemic-related impact to organizations.
  • The majority of IT spending (64 percent) is aimed at "running the business," compared to 36 percent aimed at "growth/innovation."

The full Flexera report is available here with sign-up.

About the Author

Gladys Rama (@GladysRama3) is the editor of Redmondmag.com, RCPmag.com and AWSInsider.net, and the editorial director of Converge360.

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