IDC research shows steady drop in on-premise hardware spend as cloud adoption soars

IDC infrastructure research highlights how enterprise demand for cloud is affecting on-premise IT spending trends

Users will continue to invest the bulk of their IT hardware budgets in on-premise infrastructure in 2016, but the overall amount being spent in this area is set to gradually decline over time.

According to market watcher IDC’s latest Worldwide Quarterly Cloud IT Infrastructure Tracker, around 62.8% of user spend is being used to buy servers, storage and Ethernet switches for use in traditional, on-premise environments.

This figure is expected to decline by 4% in 2016, as service providers and enterprises move to build their own public and private clouds.

The IDC tracker monitors the proportion of server, disk storage and networking hardware that is being bought and deployed in cloud and on-premise environments across the globe.

Overall, IDC anticipates that cloud-focused infrastructure spending will rise by 18.9% in 2016 and hit $38.2bn, with around two-thirds (63.8%) of this amount ($24.4bn) being used to support public cloud builds.

This will rise by 14.1% in 2016, IDC claims, while the sum being channelled into building private clouds is expected to rise by 11.1% year-over-year to $13.9bn.

Looking ahead to 2020, IDC said the five-year compound annual growth rate (CAGR) for the amount spent on servers, storage and Ethernet switches for use in cloud environments will rise to 12.5%, which the organisation suggests will equate to a real-world spend of $57.8bn.

Once again, IDC predicts public cloud deployments will account for around two-thirds of this infrastructure spend, with private cloud builds picking up the rest.

Over the same time period, on-premise infrastructure spending is expected to decline at 1.3% CAGR.

Read more about cloud spending trends

  • The amount of money invested in on-premise IT infrastructure will fall by 1.6% in 2015, as enterprises look to move more workloads and applications to the public cloud.
  • Global spending on public cloud services will grow six times faster than overall IT spending in the next four years, according to recent research by IDC.

Natalya Yezhkova, IDC research director of storage systems, said enterprises are increasingly looking to cloud technologies to support their core business activities, and to support the launch of services and innovations.

“For the majority of corporate and public organisations, IT is not a core business but rather an enabler for their core businesses and operations,” said Yezhkova.

“Expansion of cloud offerings creates opportunities for these businesses to focus efforts on core competences while leveraging the flexibility of service-based IT.”

Read more on Infrastructure-as-a-Service (IaaS)