Cloud Shift Impacts All IT Markets

IT spending continues to shift to public cloud computing, creating an opportunity for IT leaders to enable digital business transformation.

By 2024, more than 45% of IT spending on system infrastructure, infrastructure software, application software and business process outsourcing will shift from traditional solutions to cloud. This evolution makes cloud computing one of the most continually disruptive forces in IT markets since the early days of the digital age.

The proportion of IT spending that is being allocated to cloud will accelerate even further in the aftermath of the COVID-19 crisis

Organizations are increasingly using cloud services for new initiatives or to replace existing systems, meaning that spending on traditional IT solutions is being reallocated to cloud. The result is what Gartner calls cloud shift, and it is happening more often due to a growing preference for “cloud-first.”

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“Gartner’s cloud shift data reveals that enterprises are demonstrating continued preference for public cloud services compared with traditional non-cloud alternatives,” says Ed Anderson, Distinguished VP Analyst, Gartner. “The proportion of IT spending that is being allocated to cloud will accelerate even further in the aftermath of the COVID-19 crisis, as companies look to improve operational efficiencies.”

For example, the latest Gartner IT spending forecast shows that spending on data center systems is projected to be $188 billion in 2020, a 10% decrease from 2019. In contrast, spending on cloud system infrastructure services is expected to grow from $44 billion in 2019 to $63 billion in 2020, reaching $81 billion by 2022.

Cloud shift enables digital business opportunities

Cloud shift is not just about cloud. As organizations pursue new IT architectures and operating philosophies, they create a foundation for new opportunities in digital business, including next-generation IT solutions.

Organizations embracing dynamic, cloud-based operating models are primed for increased competitiveness, especially in today’s rapidly changing business environment. These organizations not only recognize the short-term benefits of cloud, but also position themselves to be early adopters of the disruptive innovations that will define the future.

The next major wave of technology disruption is already emerging in the form of artificial intelligence (AI), IoT, edge computing and advanced data analytics. These innovations are almost always tied to a cloud foundation as part of an organization’s digital business technology platform.

Infrastructure and operations leaders responsible for cloud investment decisions must be wary of ‘cloud washing’

However, infrastructure and operations leaders responsible for cloud investment decisions must be wary of “cloud washing,” or a tendency to call things cloud that are not. IT organizations and vendors may cloud wash to gain funding, make sales, or meet cloud demands and strategies, which can result in the misconception that an IT product or service must be cloud to be good.

Consider shifting from a “cloud first” approach, which prioritizes cloud adoption and legacy modernization above all else, to a “cloud-smart” approach, which balances cloud adoption with the organization’s unique circumstances and goals, and business value.

Cloud shift represents both a risk and an opportunity for IT leaders. As cloud becomes increasingly mainstream through 2024, it will dominate ever-increasing portions of enterprise IT decisions.

This article has been updated from the January 29, 2019 original to reflect new events, conditions and research.

Recommended Gartner client* reading: Market Trends: Cloud Shift — 2020 Through 2024 by Michael Warrilow, Ed Anderson and Colleen Graham.

 

*Note some documents may not be available to all Gartner clients.

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