Is the cloud as big as CTOs think?

A growing cloud

Posted on Wednesday, May 31, 2017

With over 1,100 hosted applications in use at the average enterprise, the cloud has clearly integrated itself into the fabric of most businesses. On that basis, it would be logical to assume that cloud services make up a significant proportion of annual IT spend.

However new research from IDC throws that assumption into doubt.

The cloud is insignificant. In terms of spend anyway.

The new Worldwide Semiannual Public Cloud Services Spending Guide suggests that public cloud and infrastructure spend will reach $122.5 billion this year – a not insignificant sum.

However, according to IDC’s estimates that were published at the beginning of May, total IT spend will top $2.4 trillion in 2017. Which means that cloud will account for just 5% of that amount.

Two observations

There are two things to note from these figures. First, either cloud deployments are not as prevalent as originally believed, or hosted technology is living up to the hype and helping to keep operating costs low.

Second, businesses are still spending vast sums on their on-site infrastructure. Unfortunately IDC do not drill down into non-cloud spend, but it is clear that 95% of IT budget is going somewhere other than “as a Service” offerings.

The usual suspect – support and maintenance

Historically, a large portion of IT budget is spent on unsexy factors like support and maintenance. For the CTO, this is concerning – every penny spent on support and maintenance could have been invested in strategic projects instead.

Clearly the cloud has potential to help reduce spend, but businesses are still not able to take full advantage – too much is still being paid to OEMs for support and maintenance which is of a questionable standard. Instead they should be investigating the use of third party maintenance and support services as a way to reclaim a significant portion of their budget.

Until spend on maintaining existing systems can be brought under control, businesses will not be able to invest in new systems – like cloud platforms. Which means that the next IDC on cloud spend could be equally surprising.

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