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The recent Cloud Industry Forum report into how customers spend their money on infrastructure caught the attention of Billy MacInnes

One of the big headlines from the Cloud Industry Forum’s recent report, Cloud – The Next Generation, was that the allocation of IT budget for cloud infrastructure had surpassed on-premise infrastructure for the first time in 2018.

The survey found that organisations spent 19% of their overall IT budget on cloud infrastructure, compared to 18% for on-premise infrastructure. Within three years, the gap is set to widen further with cloud infrastructure accounting for 20% of the overall IT budget and on-premise infrastructure shrinking to 12%.

This might not be as surprising as it first appears when you consider that overall spending on the cloud (including infrastructure, cloud SaaS toolsets, cloud applications and cloud platforms) accounted for 43% of the overall IT budget in 2018 (a figure which will rise to 47% in the next three years).

When they were asked to rank their reasons for using cloud-based services, organisations identified agility, flexibility and scalability, as the three main factors. Cost savings came in fourth, cited by 30%. Interestingly, from a partner’s perspective, more than 20% stated they were using cloud-based services because “we have an IT partner(s) who we trust”.

The report highlighted outsourcing and the cloud’s potential to transform the IT department as significant factors, stating that respondents understood that “by shifting the burden of server management to trusted third parties, IT teams are freed up to focus on value-added activities and business transformation”.

It also found that cloud service providers (CSPs) were playing a powerful role in helping organisations in their shift to new development principles and methodologies, such as agile development and DevOPs. Respondents stated that the most highly regarded attribute they were looking for when it came to choosing a CSP was “stability”. Surprisingly, very few (2%) were looking for providers with a specialist knowledge of their business and sector.

The report argued that “realising some of the truly transformational benefits of cloud-based services increasingly depends on the specialist vertical knowledge of CSPs, indicating that this may be a blind spot for many cloud users”. Possibly, but it may also be that many could be adopting cloud-based services that are so generic in nature that they don’t require specialist vertical knowledge.

In any case, if it is a “blind spot”, it’s something most respondents suffer from. Just under a third revealed they based their decision on whether the cloud provider was a “large, stable company”. Only 16% prioritised trust in the provider and the strength of their relationship, while 14% admitted their decision was down to who provided the best price. Technical knowhow was the biggest priority for 15% of respondents and another 14% said they were looking for visionaries to help them build their strategy.

While it’s welcome that trust plays some part in the process for a number of organisations, it’s a pity it applies for a relatively small number. The fact trust is only marginally more important than price doesn’t say much for the value of the partner/customer relationship either, although we should probably take some small comfort in the fact a similar number believe technical knowhow is the main priority. Then there’s the 14% who are prepared to take a risk and go beyond the safe confines of what they know to engage visionaries to build their strategy.

The good news for customers is that the range of potential partners is wide enough for them to find someone that can deliver against any of those priorities.

This was last published in November 2018

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