Cloud is Now The Default Choice for New Infrastructure Says IDC

If your next server or storage device is hosted at your office, you'll be in the minority, according to the market research firm IDC.

In Q4 2021, more money was spent on cloud infrastructure ($21.1bn) than on non-cloud infrastructure ($17.2bn).

The figures come from IDC's report "Worldwide Quarterly Enterprise Infrastructure Tracker: Buyer and Cloud Deployment."

Between Q4 2020 and Q4 2021, shared cloud infrastructure spending rose 13.9 per cent, reaching $14.4 billion. Spending on dedicated cloud infrastructure rose 12.5 per cent to $6.7 billion. Non-cloud infrastructure spending rose just 1.5 per cent to $17.2 billion.

IDC forecasts that shared cloud infrastructure spending will grow 25.5 per cent to $64.5 billion annually. Dedicated cloud infrastructure will grow 13.1 per cent to reach $25.4 billion. Non-cloud infrastructure spending is expected to fall 0.3 per cent to $59.4 billion.

If these predictions are borne out, spending on public cloud infrastructure will outstrip spending on non-cloud solutions for the first time.

Does the shift to cloud mean on-premises infrastructure is over?

No. IDC forecasts that expenditure on non-cloud infrastructure won't be falling for long. It will grow by around 0.5% pa in the years leading up to 2026. This is far slower than the growth in cloud expenditure, but it’s still greater than zero and a long way from being double-digit percentage falls. The common narrative that most on-premises solutions are destined to be replaced by the cloud is wide of the mark, at least for now.

What is driving the shift towards the cloud?

Many companies are replacing legacy systems with cloud-based alternatives. Others are happy to leave their existing workloads where they are, while hosting any new workloads in the cloud.

A key driver of the shift towards the cloud has been the large amounts of money poured into software as a service (SaaS) startups by venture capital (VC) funds such as Sequoia.

Rapidly growing (and increasingly well-capitalised) SaaS firms usually decide to build cloud-native apps so they can benefit from the flexibility, scalability and technical competence offered by cloud providers. As ordinary firms sign up for these SaaS offerings, they vote with their wallets to host data and applications in the cloud.

It’s not just new VC-financed software firms that are driving the shift to the cloud. Traditional software firms are too. They are launching cloud-hosted versions of their proprietary software as this creates reliable revenue streams, simplifies technical support, allows frequent product updates and makes it possible to offer cost-effective free trials.

Another reason that cloud is also growing more popular is that public cloud hosting is becoming more affordable. Major providers such as Amazon, Microsoft and Google have the scale and the capital to deliver cloud hosting at prices that are cheap by historical standards.

Software such as VMware Cloud Director is making it easier for service providers such as hSo to provision and support cloud hosting services.

Perhaps the main driver of cloud infrastructure growth is the increasing awareness of the cloud’s business benefits. These benefits include greater scalability, heightened security, enhanced reliability, cost savings, more time for IT staff to focus on company-specific issues and better visibility of resource utilisation.

Cloud is also a good fit for the requirements of the modern world, enabling better collaboration and communication among remote workers and offering an easy way for businesses to reduce their carbon footprint.

What next for cloud?

More growth. According to IDC, expenditure on cloud-based compute and storage infrastructure is expected to rise by an average 12.6% pa from 2021 to 2026.

Spending on cloud infrastructure will rise further as organisations adopt flexible and hybrid working models made easier by cloud services.

For security reasons, some employees working remotely will be asked to use virtual desktops such as those provided by AWS Workspaces and Azure Virtual Desktop.

Microsoft has its own challenger in this space – Windows 365. It’s a service introduced last year that enables businesses to access Cloud PCs remotely, streaming Windows 10 or Windows 11 via a web browser. This year, Microsoft will focus on creating native support for Windows 365 within Windows 11. This will allow employees to work remotely using cloud-powered devices. In particular, it will allow employees to use their own (employee-managed) devices to access employer-managed desktops.

What does the shift to cloud mean for IT managers?

The role of the IT manager will change. There will be less of a focus on physically provisioning servers and more on evaluating, procuring and managing third-party hosted solutions via portals and control panels.

Given this change in the definition of the IT manager role, it is likely that companies will place greater value on skills such as supplier management and the ability to control cloud costs.

Taking Advantage of the ‘New Normal’

If you would like to migrate some of your organisation's workloads to the cloud, hSo can assist. We can help you plan your migration, set up new cloud infrastructure and host your workloads across multiple data centres.

To find out more, give us a call on 020 7847 4510.