Press Release

STAMFORD, Conn., July 20, 2016 View All Press Releases

Gartner Says by 2020 "Cloud Shift" Will Affect More Than $1 Trillion in IT Spending

IT Asset Managers Must Identify Risks and Opportunities and Adjust Vendor Management Styles

Analysts to Explore the Impact of Cloud at the Gartner IT Financial, Procurement & Asset Management Summits 2016 in London, U.K. 12-13 September and Grapevine, Texas 19-21 September

More than $1 trillion in IT spending will be directly or indirectly affected by the shift to cloud during the next five years, said Gartner, Inc. This will make cloud computing one of the most disruptive forces of IT spending since the early days of the digital age.

"Cloud-first strategies are the foundation for staying relevant in a fast-paced world," said Ed Anderson, research vice president at Gartner. "The market for cloud services has grown to such an extent that it is now a notable percentage of total IT spending (see Table 1), helping to create a new generation of start-ups and "born in the cloud" providers."

Figure 1: Shift From Traditional IT Spending to Cloud

Charting "Cloud Shift"

Source: Gartner (July 2016)

IT spending is steadily shifting from traditional IT offerings to cloud services (cloud shift). The aggregate amount of cloud shift in 2016 is estimated to reach $111 billion, increasing to $216 billion in 2020. Cloud shift rates are determined by comparing IT spending on cloud services with traditional noncloud services in the same market categories (see Table 1).

Table 1. Cloud Shift Summary by Market Segment

Legacy Segment

Cloud Segment

Total Market Size in 2016

Total Cloud Shift in 2016

Cloud Shift Rate Through 2020

Business Process Outsourcing

BPaaS

$119 billion

$42 billion

43%

Application Software

SaaS

$144 billion

$36 billion

37%

Application Infrastructure Software

PaaS

$177 billion

$11 billion

10%

System Infrastructure

IaaS

$294 billion

$22 billion

17%

BPaaS = business process as a service; IaaS = infrastructure as a service; PaaS = platform as a service; SaaS = software as a service

Source: Gartner (July 2016)

In addition to the direct effects of cloud shift, many markets will be affected indirectly. Identifying indirect effects can help IT asset and purchasing managers ensure they are getting the best value out of new expenditure and are protected against risk, as well as assisting them to exploit the new opportunities caused by cloud shift.

For example, instead of buying operating systems (OSs) for each user in the traditional way, many will be provided as OS images — particularly with the use of containers for next-generation applications. Another example is that enterprise storage needs could be met with a lower up front cost and far more scalability by switching to cloud solutions instead of buying dedicated hardware.

"Cloud shift is not just about cloud. As organizations pursue a new IT architecture and operating philosophy, they become prepared for new opportunities in digital business, including next-generation IT solutions such as the Internet of Things," said Mr. Anderson. "Furthermore, organizations embracing dynamic, cloud-based operating models position themselves better for cost optimization and increased competitiveness."

More detailed analysis is available to Gartner clients in the report "Market Insight: Cloud Shift — The Transition of IT Spending from Traditional Systems to Cloud."

Gartner IT Financial, Procurement & Asset Management Summits

Gartner analysts will provide additional analysis on IT financial and procurement trends at the Gartner IT Financial, Procurement & Asset Management Summits 2016 taking place September 12-13 in London and September 19-21 in Grapevine, Texas. You can follow news and updates from the events on Twitter using #GartnerITAM.

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About Gartner

Gartner, Inc. (NYSE: IT) is the world's leading information technology research and advisory company. Gartner delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior information technology (IT) leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to supply chain professionals, digital marketing professionals and technology investors, Gartner is the valuable partner to clients in more than 11,000 distinct enterprises. Gartner works with clients to research, analyze and interpret the business of IT within the context of their individual roles. Gartner is headquartered in Stamford, Connecticut, U.S.A., and has almost 9,000 associates, including 1,900 research analysts and consultants, operating in more than 90 countries. For more information, visit www.gartner.com.

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