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IDC: On-premise infrastructure spend will continue to fall in 2017 as cloud demand soars

IDC's latest quarterly cloud infrastructure spending forecast shines a light on how the dwindling demand for on-premise technologies is shaking up IT investments

The growing demand for public and private cloud services will lead to a 12.4% year-over-year surge in IT infrastructure spending to $40.1bn, predicts market watcher IDC.

According to the firm’s latest Worldwide Quarterly Cloud IT Infrastructure Tracker, 60.7% of the money spent on server, storage and Ethernet switch technology in 2017 will originate from firms looking to kit out public cloud-hosting datacentres.

This figure is tipped by IDC to rise year over year by 13.8%, while the amount spent on servers, storage and Ethernet technology for use in off-premise private cloud environments is expected to rise by 11.9% over the same time period. Off-premise private cloud deployments are on course to capture around 14.9% of the overall $40.1bn IDC expects organisations to shell out on cloud-enabling IT infrastructure products this year.

Natalya Yezhkova, a research director tracking the Enterprise Storage segment for IDC, said enterprise interest in hybrid and multi-cloud deployment models have led to a consistent change in IT spending patterns.

“The overall profile of spending on IT infrastructure in various deployment or location scenarios seen in 2016 will continue in 2017, with some differences in specific technology segments,” said Yezhkova.

“Enterprise adoption of hybrid and multi-cloud IT strategies and the proliferation of cloud-native applications and areas such as the internet of things (IoT), which embrace a cloud-first approach to supporting IT resources, will fuel further increases in end-user spending on services-based IT.

“In turn, this move will be reflected in a shift of the overall spending on IT infrastructure from on-premise to off-premise deployments and from traditional IT to cloud IT,” she added.

Read more about cloud technology investment patterns

The figures point to a continuation of an ongoing, worldwide trend IDC has been documenting for some time now, whereby the amount being spent on cloud-enabling technologies continues to rise quarter by quarter, while investments in non-cloud IT infrastructure products fall.

Indeed, IDC predicts worldwide spending on non-cloud-related IT infrastructure products will fall by 4.6% in 2017, but will still account for around 58.7% of money spent on IT infrastructure overall this year.

To put these figures into context, in 2016, non-cloud-related IT infrastructure purchases accounted for 62.6% of total amount paid out by companies around the world for servers, storage and Ethernet switches.

The downward trend is expected to continue for at least the next five years, predicts IDC, with spending on public cloud enabling infrastructure set to grow with a compound annual growth rate (CAGR) of 11%, while the amount paid out for non-cloud IT technologies are tipped to decline with a 3.1% CAGR over the same period.

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