IT spending on public cloud accelerates

Posted by Mike Vizard on Jan 28, 2016 10:35:13 AM

Public_cloud_acceleration.jpgWhile it’s difficult to say exactly how much money is pouring into public clouds, the growth rate is certainly staggering. This week, Gartner forecasted that public cloud spending will reach $204 billion in 2016, while International Data Corp. (IDC) predicted a more conservative $141 billion in public cloud spending by 2019.

Such forecasts, of course, depend on what is counted as cloud. Gartner analysts, for example, are including cloud advertising, which accounts for $90.3 billion in their forecast. Total cloud spending in 2015, says Gartner, was $175 billion.

The fastest growing segment, according to Gartner, is infrastructure-as-a-service (IaaS), which is expected to reach $22.4 billion in 2016, representing a 38.4 percent growth rate. Other cloud market segments such as platform-as-a-service (PaaS) are forecasted to reach $4.6 billion, which represents a 21 percent growth rate on the $3.5 billion generated in 2015. Business-processes-as-a-service (BPaaS) are forecasted to achieve 8.7 percent growth, while software-as-a-service (SaaS) is expected to continue to grow at a rate of 20.3 percent.

For its part, IDC says public cloud spending will increase 19.4 percent on a compound annual basis. IDC notes that rate is six times greater than the growth rate for the rest of the IT market.

Impact on IT service providers

Those forecasts are also baring out among IT service providers. A survey of more than 400 managed service providers (MSPs) conducted by Kaseya finds that more than 50 percent now offer cloud services (IaaS, PaaS, SaaS). In addition, 75 percent of the MSPs who offer cloud services report that this revenue source increased in 2015. Well over 50 percent also expect revenues for these services to continue to increase in 2016.

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Of course, as impressive as those numbers sound, they still only represent a fraction of the trillions of dollars in IT spending every year. As more application workloads move into the cloud, it’s clear the future of enterprise IT will be defined by hybrid clouds.

The challenge that represents is two-fold. On the one hand, it’s much simpler to manage IT when most of the lower level tasks are being handled by a cloud service provider. All that most IT service providers and their customers need to concern themselves with is the application programming interface (API). Everything that happens on the other side of that API becomes an invisible process.

Increased demand for cloud expertise

At the other end of the spectrum, however, the movement of data and application workloads among multiple cloud services requires a fair amount of IT expertise.

For IT service providers, that means they will need to shift much of the technical expertise they put in front of the customer away from lower level IT infrastructure to focus more on how data gets managed. In most cases, that effort will require retaining new IT talent or retraining existing personnel. In either case, the makeup of the IT team that provides services in the age of the hybrid cloud will soon look substantially different than it did a few short years ago.

In the meantime, IT services providers would be well advised to keep their portfolios balanced. A shift to the cloud is clearly happening at a significant rate, but the bulk of IT operations continue to run on premise. As such, IT services providers would be doing themselves and their customers a disservice if they ignored where the bulk of the demand for IT services expertise continues to reside.

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Photo Credit: Greg Goebel via Used under CC 2.0 License.

Topics: IT Services Trends, Cloud Trends

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