Cloud to Have $1Trillion Impact on IT Spending

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It’s no secret that the cloud computing market is growing by leaps and bounds, but a new forecast from Gartner is showcasing the transformative effects the technology is having on IT expenditures.

Direct software sales are increasingly giving way to cloud subscriptions. Today’s startups spin up consumer-facing Web apps in the cloud rather than host them on their own servers. Even small businesses and households are sharing and backing up files on services like Dropbox rather than stock up on USB and external drives.

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Gartner estimates that by 2020, the “cloud shift,” or the transition from traditional IT for cloud-enabled environments, will have a direct and indirect impact on more than $1 trillion in IT spending. “Cloud-first strategies are the foundation for staying relevant in a fast-paced world,” said Ed Anderson, Gartner research vice president, in a statement. “The market for cloud services has grown to such an extent that it is now a notable percentage of total IT spending, helping to create a new generation of start-ups and ‘born in the cloud’ providers.”

gartner cloud

This year, cloud providers will successfully attract $111 billion in new business at the expense of their legacy counterparts, Gartner predicts. By 2020, that figure will nearly double to $216 billion.

The shift will be most pronounced in the business process outsourcing market, where business process as a service (BPaaS) providers are expected to attract $42 billion in spending that may have otherwise been spent on traditional solutions. In second place are software as a service (SaaS) providers with $36 billion, followed by infrastructure as a service (IaaS, $22 billion) and platform as a service (PaaS, $11 billion).

Moving to the cloud will also have indirect effects, influencing the way IT managers plan and budget for their technology initiatives. Gartner noted that some enterprises may opt to let the cloud handle some of their storage needs, with greater scalability and lower upfront costs to boot.

“Cloud shift is not just about cloud. As organizations pursue a new IT architecture and operating philosophy, they become prepared for new opportunities in digital business, including next-generation IT solutions such as the Internet of Things,” said Anderson. “Furthermore, organizations embracing dynamic, cloud-based operating models position themselves better for cost optimization and increased competitiveness.”

Pedro Hernandez is a contributing editor at Datamation. Follow him on Twitter @ecoINSITE.