UPDATED 01:06 EDT / JULY 25 2016

NEWS

Report: “Cloud shift” to disrupt IT spending to the tune of $1 trillion

Gartner Inc. has reinforced something that most readers will already know – that cloud computing is poised to become one of the “most disruptive forces in IT spending” since the early days of the digital age.

But the impact is still staggering. In a new report (subscription required), the analyst house forecast more than $1 trillion worth of IT spending will be directly or indirectly impacted by a monumental shift towards cloud services over the next five years.

Citing the accelerating momentum of the “cloud-native” movement around distributed applications and other IT infrastructure, Gartner reckons the aggregate total of what it calls “cloud shift” spending with hit $111 billion this year alone, almost doubling to $216 billion by the end of the decade. As such, the cloud services market now represents a “notable percentage of IT spending, helping to create a new generation of startups and ‘born in the cloud’ providers,” said Gartner analyst Ed Anderson in a statement.

So what’s fueling this rapid cloud growth? Pretty much everything, Gartner suggests. It points to a growing demand for public and private cloud-based enterprise software, data center and IT services among businesses, which are warmly embracing the “as-a-service” model for software, platforms, infrastructure and business processes. Gartner also points to operating systems as a key “influencer”, noting that many of these are increasingly based on open-source projects like OpenStack. It also points to virtualization, data center storage, networking and servers, and IT services like hosting and co-location as other influencers.

One reason why operating systems are driving cloud growth is that the delivery mechanism is changing to an OS image model. This streamlined delivery mode will have the effect of accelerating the adoption of microservices like secure containers, which will be used to deliver next-generation distributed apps. Cloud-based storage is also viewed as outpacing dedicated storage hardware in terms of cost and scale.

However, business process outsourcing is set to be the biggest driving force behind the cloud shift in the next five years, accounting for 43 percent of IT spending by 2020, Gartner says. Another big factor is application software delivered “as-a-Service”, which will account for 37 percent of cloud shift spending.

Gartner Cloud Shift Spening

“Organizations embracing dynamic, cloud-based operating models position themselves better for cost optimization and increased competitiveness,” Gartner’s Anderson remarked.

Gartner’s findings seem to reflect recent financial results in the industry. Just last week, Microsoft reported its earnings, with strong growth for its Azure cloud platform helping to drive revenues above Wall Street’s estimates. According to Microsoft, Azure revenues jumped by over $4 billion on an annual basis to $12.1 billion.

Photo Credit: kcdcloud29 via Compfight cc

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