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Enterprises predict cloud budget growth will outpace overall IT spend in 2017

451 Research's latest Voice of the Enterprise report suggests enterprise IT buyers are feeling very optimistic about how much money they will get to spend on cloud and hosting technologies in 2017

Enterprises expect the growth of their cloud and hosting budgets to significantly outpace how much money they get to spend on IT overall, suggests a report by 451 Research.

The market watcher’s Voice of the Enterprises: Hosting and Cloud Managed Services, Budgets and Outlook study reveals enterprises are anticipating the growth of their cloud and hosting budgets to exceed their general IT spend by 25.8% to 12% in 2017.

“This trend applies across almost every vertical market and company size category, but is most pronounced among large businesses (between 1,000 to 9,999 employees), which expect an average of 33.3% growth in hosting and cloud services spending,” said 451 Research in a statement.

The report’s findings are based on feedback provided by 1,000 IT professionals from across the globe between January and February 2017, which is then combined with information garnered from 60,000 senior IT buyers to create the final document.

When asked how they expect their 2017 budgets will compare with what they had to spend in 2016, 88% anticipated an uptick in their cloud and hosting spend this year, while 70% are hopeful about getting more money year-on-year to spend on IT overall. Furthermore, 9.5% said they are steeling themselves for a reduction in their cloud and hosting budgets, while 22.3% said they expect the same where their general IT budget is concerned.  

Liam Eagle, 451 Research manager and the report’s author, said the findings highlight the growing importance of hosting and cloud services to enterprises and their wider IT investment plans.

“We see the pace of investment in hosting and cloud services exceeding investment in IT overall, meaning hosting and cloud services are becoming a focus of IT investment, via both new projects and the migration of existing workloads,” said Eagle.

Read more about IT and cloud spending trends

“Even some businesses that are reducing IT spending overall are increasing hosting and cloud spending, meaning service providers should not overlook companies looking to reduce IT costs as prospects.”

The reasons why enterprises are choosing to ramp up their cloud and hosting spend vary according to company size, the report found, with smaller firms looking to off-premise services to increase their capacity for growth.

Meanwhile, for very large firms (with more than 10,000 employees), the main driver for spending more on cloud is to downsize their on-premise footprint.

“Significant adoption profile differences among different company sizes in terms of adoption rates and drivers reinforce the idea that company size is not just a category difference but indicative of markets with totally different hosting and cloud services characteristics,” said Eagle.

“This gives providers a compelling business case for specialisation and is one of the reasons the hosting and cloud services market is served by such a wide variety of suppliers and supplier types.”

Support for multi-cloud grows

The research also revealed a growing willingness amongst enterprise IT buyers to adopt a multi-cloud approach to sourcing services and technology, with many respondents sharing plans to increase their spending with an aggregate of suppliers, rather than a single provider.

Microsoft Azure and Amazon Web Services (AWS) were flagged by respondents as being the largest recipients of their IT budgets, with many outlining plans to increase their spending with both these suppliers.

“Increased spending is also planned with several other suppliers, including public cloud and managed hosting suppliers in aggregate. However, customers’ plans to increase spending for any individual supplier trail hosting and cloud spending increases overall, suggesting that over time enterprises will spread their growing hosting and cloud services budget over a larger number of providers,” said the report.

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