by Barbara Darrow

Yes, the cloud computing category can grow (almost) forever

Apr 12, 2018
BudgetingCloud ComputingTechnology Industry

Market projections on cloud IT spending vary, but they’re all heading in the same direction.

Nothing goes up forever, but in the case of cloud computing, there appears no end of growth in sight as companies increasingly put their trust and their data in the cloud. These cloud services could be public clouds shared by many customers on a single set of infrastructure managed and run by a cloud provider, or private cloud resources dedicated for their own use.

Having said that, projecting actual dollars-and-cents spending on cloud services—or any segment of IT for that matter—is like trying to nail Jell-O to a wall.

So much depends how “cloud computing” is defined. Are you talking about basic plumbing? That’s the servers, storage, networking —known as Infrastructure-as-a-Service (IaaS)?

Or are you referring to an application development platform comprising higher level software tools for building applications?  This is Platform-as-a-Service (PaaS).

Or, do you mean full business applications delivered over the Internet (a category known as Software-as-a-Service?)

Cloud, cloud everywhere

However, you cut it, cloud spending is becoming a CIO priority, according to a Morgan Stanley survey of 100 Chief Information Officers in the U.S. and Europe. These executives expect a full quarter of their software applications will run in the cloud by late 2018, up from 20% now, and they expect 44% of their applications to be in the cloud by 2021.

The survey also reveals that cloud computing and security are their top IT spending priorities going forward, in the context of broadly flat IT spending growth, The Wall Street Journal’s CIO Journal reported.

According to Synergy Research chief analyst John Dinsdale, the cloud computing category, roughly 11 years old, hit the mainstream in 2015 and by last year became “the new normal” in IT spending. Spending on cloud computing across all categories grew 24% last year, to $180 billion in revenue, according to Synergy Research data released in January.

Security fears ebbing

Factors that have hindered broader cloud adoption in the past are fading, at least according to the 1,002 IT pros surveyed by cloud monitoring and management company RightScale, in its 2017 State of the Cloud Report

A quarter of respondents to the survey cited lack of resources and/or lack of expertise as a factor in cloud deployment decisions. That’s a significant number but is considerably lower than the 32% who noted those concerns the previous year.

And, 25% of respondents still fret over security, a traditional barrier to cloud adoption — a number that also fell relative to the 29% figure from the year previous. 

What that indicates is that corporate citizens including IT managers, and C-level executives are getting over any remaining cloud qualms they may have had.

In the past many companies’ IT staffs were loath to entrust data and workloads to computer gear they did not own or control completely. But with growing trust in outside “cloud” data centers, this constituency is joining ranks with software engineering and development teams who started embracing cloud earlier on over the last decade.

According to RightScale’s report:

“Enterprise central IT has a broader view of its cloud role in 2017 that includes selecting public clouds (65 percent), deciding/advising on which apps move to cloud (63 percent), and selecting private clouds (63 percent).”

In January, market research firm International Data Corp. said it expected spending on public cloud services (IaaS) to rise 23.2% this year to reach $160 billion worldwide by year’s end. For all the talk of cloud computing, it is important to remember that the world is still early into this journey with estimates of cloud adoption varying widely.

International Data Corp. also expects the pace of cloud adoption compounded annually to hit almost 22% between now and 2021, despite the larger base. That would put total spending on public cloud services at $277 billion in three years’ time.