More than a quarter of key IT investments set to shift to cloud

26 October 2018

Twenty-eight per cent of spending within key enterprise IT markets will shift to the cloud by 2022, up from 19 per cent in 2018, says Gartner.

The analyst expects growth in enterprise IT spending on cloud-based offerings to be faster than growth in traditional, noncloudy IT offerings. Despite this, it says traditional offerings will still constitute 72 per cent of the addressable revenue for enterprise IT markets in 2022.

According to the forecasts, more than $1.3tn in IT spending will be directly or indirectly affected by the shift to cloud over the next four years.

Gartner says the largest cloud shift prior to 2018 occurred in application software, particularly driven by CRM which has already reached a tipping point where a higher proportion of spend occurs in cloud than in traditional software. The firm believes this trend will continue and expand to cover additional application software segments, including office suites, content services, and collaboration services, through to the end of 2022. It adds that application software will retain the highest percentage of cloud shift during this period.

The researchers go on to forecast that almost one-half of the addressable revenue will be in system infrastructure and infrastructure software over the next four years. They say system infrastructure will be the market segment that will shift the fastest between now and 2022 as current assets reach renewal status. This segment currently represents the market with the least amount of cloud shift. Gartner says this is due to prior investments in data centre hardware, virtualisation and data centre operating system software and IT services, which are often considered costly and inflexible.

Gartner research VP Michael Warrilow says: “As cloud becomes increasingly mainstream, it will influence even greater portions of enterprise IT decisions, particularly in system infrastructure, as increasing tension becomes apparent between on- and off-premises solutions.”