Enterprise spending on cloud infrastructure services has grown by 35% to reach nearly $130 billion in 2020. Meanwhile, enterprise spending on data centre hardware and software dropped by 6% to under $90 billion, reveals a new study by Synergy Research Group.
Over the decade, average annual spending growth for data centre was just 2% and for cloud services (IaaS, PaaS and hosted private cloud) was 52%.
“Over the last ten years we have seen a dramatic increase in computer capabilities, increasingly sophisticated enterprise applications and an explosion in the amount of data being generated and processed, resulting in an ever-growing need for data centre capacity. However, 60% of the servers now being sold are going into cloud providers’ data centres and not those of enterprises,” John Dinsdale, a chief analyst at Synergy Research Group, said in a statement.
Worldwide spending on enterprise data centre hardware and software (comprising servers, storage, networking, security and associated software) was $89 billion last year. Virtualisation software, Ethernet switches and network security saw highest growth rates over the decade.
Within cloud infrastructure services market, the major segments with the highest growth rates over the last 10 years were mainly within Platform-as-a-service (PaaS) – especially database, IoT and analytics. Infrastructure as a service (IaaS) shares remained steady while privately-managed cloud service shares declined, the research showed.
“When a company needs computing power to manage its data and to run its business apps, it can either invest in its own data centre infrastructure or it can use cloud services provided by a public cloud provider. Clearly companies have been voting with their wallets on what makes the most sense for them. We do not expect to see such a drastic reduction in spending on enterprise data centres over the next five years, but for sure we will continue to see aggressive cloud growth over that period,” Dinsdale said.
According to a recently released report by Nutanix, an overwhelming majority of enterprises across the globe feel hybrid cloud is the right architecture for their organisations. The third annual Enterprise Cloud Index (ECI) report by said 86% of enterprises surveyed consider hybrid cloud as their ideal operating model and has taken the initial key steps to establishing a hybrid cloud environment. These measures include adopting hyper converged infrastructure (HCI) in their data centres and decommissioning non-cloud-enabled data centres in favour of private and public cloud usage.
Gaining greater control of IT resources, achieving the flexibility to meet dynamic business requirements, and improving support for customers and remote workers were found to be the primary motives for modifying IT infrastructures.
Enterprises running hybrid cloud environments are planning on making their organisations more agile and become more competitive as a result of COVID-19, compared to organisations using other deployment models. Additionally, they are also more likely to offer flexible work options and strengthen their business continuity plans because of the pandemic. This finding implies that a hybrid cloud infrastructure positions them more favourably to achieve these goals than other setups might.