As 2016 gets underway, a few trends are starting to emerge in how IT departments are spending their money. According to a recent Gartner report, worldwide IT spending is expected to reach a total of $3.54 trillion in 2016. This is only a 0.6 percent increase from the 2015 value of $3.52 trillion, but it’s a serious turnaround from 2015’s decline in spending over 2014.
As far as IT spending is concerned, it’s clear that the different areas of the technology industry enjoy a symbiotic relationship. For instance, according to numbers cited by ZDNet contributor Steve Ranger, cloud investments cause companies to spend more on data center construction and software. When more money is spent on services like cloud backups and private cloud infrastructure, this causes software and data center spending to grow, as companies are running more applications within their virtual environments.
We can take that connection even further, as well: With more cloud-based applications and storage solutions, businesses don’t have to invest as much money in on-premises equipment. Since all of the equipment is technically housed in the private cloud provider’s data centers, individual businesses don’t have to spend money maintaining or expanding their own IT infrastructure – all the expansion takes place on the virtual plane.
“[These] numbers reflect the growing impact that the rise of the cloud is having on IT spending decisions: With more spending on software and the data center infrastructure to support those cloud applications, businesses see less need to invest in local processing power on PCs,” Ranger stressed.
Companies are turning to cloud infrastructure to help store applications and data, run analytics tools and generally make IT management easier in the long term. The cloud’s main business benefits – e.g. better collaboration, lower operational cost and the ability to access data from anywhere – are also beginning to make a difference across the board for companies in every industry. Therefore, it’s not surprising that the worldwide market for IT spending reflects the cloud as a driver for growth.
“The cloud side of the spending scale will be heavier within five years.”
Data center and on-premises IT infrastructure spending still represent a larger portion of the total value than money spent on cloud infrastructure. However, The Next Platform contributor Timothy Prickett Morgan predicted that within five years, the cloud side of the spending scale would be heavier. If spending on cloud services continues to balloon at the current rate, it’s easy to see how Morgan’s projection could indeed come to pass. In fact, research firm IDC predicted last year that in 2019, service providers will likely spend $19.4 billion on private cloud IT infrastructure.
What does this mean for the future of the cloud? Businesses that make the decision to invest in private cloud services now will be able to cut spending on their on-premises IT infrastructure needs. The importance of this technology will become clearer as 2016 progresses – but it’s certain to change the landscape of IT spending forever.