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Cloud set to net a larger share of enterprise IT budgets in 2017, predicts 451 Research

451 Research's cloud and hosting market review suggests enterprise IT decision makers are preparing to ramp up with use of cloud and hosting services in 2017

The proportion of enterprise IT budgets set aside for cloud and hosting services is set to rise from 28% to 34% in 2017, according to 451 Research’s latest voice of the enterprise report.

Speaking to Computer Weekly, Liam Eagle, research manager and co-author of 451 Research’s Voice of the enterprise: hosting and cloud managed services study, said this predicted shift in IT spending is being driven by enterprises wanting to tap into the well-documented benefits of using cloud.

“Within some organisations, there is a perceived benefit to moving from making big capital expenditures on computing hardware to moving to a more operational model where you only pay for the capacity as you need it. That’s one basic driver of adoption,” he said.

The other main drivers are greater flexibility and access to resources, and now there’s an element of transformation that needs to take place within the IT organisation to take advantage of that.”

The report sets out to track how the buying habits of enterprises change as they move to shift on-premise applications and workloads into cloud and hosting environments.

Its findings are based on feedback from more than 580 IT professionals from around the world, who were quizzed on their infrastructure, application and managed services investment plans in September 2016.

The report goes on to provide a breakdown of how enterprises spend their cloud and hosting budgets, with 42% given over to application services investments and around a third (31%) used to acquire infrastructure services.

The remainder, meanwhile, is spent on managed services (14%), security offerings (9%) and cloud deployment-focused professional services (5%).

Chopping up the figures in this way uncovered a number of reasons why enterprises are keen to ditch their on-premise resources and, in some cases, cede control to others for managing them, said Eagle.

“For hosted applications and software as a service [SaaS], the most common driver was that it’s considered to be more cost effective. When they’re adopting managed services, however, it’s more about freeing up their IT staff to focus on other projects,” he said.

“In the security services space, for instance, it is more about accessing specialised technical expertise that they may not have internally. In some other cases, it means the work of maintaining infrastructure and services, which can be pretty mundane, can be offloaded elsewhere.”

Managing yourself

The report also shines a light on the split between organisations that favour the use of managed services and those that do not. As such, its findings revealed more than half (56%) of infrastructure and application services spending (51%) is for products without a managed services component.

Eagle said this trend is a good indicator of how far along the journey to the cloud enterprises are, as firms tend to adopt a “do it yourself” approach when they first start out, before moving to adopt managed services as their cloud and hosting environments become more complex.

“If you think about hosted and cloud infrastructure in general, a pretty significant portion of that usage is going to infrastructure as a service [IaaS] and utility compute products such as Microsoft Azure,” he said. “Without the wrapper of managed services, we would consider those to be unmanaged services,” he said.

Read more about cloud adoption trends

“Some of the folks who are much further along the adoption of external managed services tend to look at that as a later stage of maturity,” added Eagle. “I think we will see the dials tick towards managed services over time, as a percentage of the overall infrastructure.”

To back this point, the research shows that, while enterprises are inclined to use hosting and cloud services from a wide range of providers, 69% rely on IaaS providers and around a quarter (26%) use managed hosting firms.

While some organisations go down the managed services route to supplement the expertise of their existing IT departments, others use this approach to help them downsize, said Eagle.

“Generally speaking, more than 60% of respondents told us they were not seeing a change in headcount as a result of using cloud services,” he said.

“Are you adding headcount to support this, or manage provider suppliers, or reducing headcount because you don’t have so much to manage? The main response amongst the ones of no change was that they are hiring more staff to support such hosting and cloud projects.”

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

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