Enterprise reliance on cloud services reflected in 2017 IT spending priorities

Enterprises will spend more of their IT budgets on hosting and cloud services next year, a new study has revealed.

Large companies will allocate 34% of their IT budgets to hosting and cloud services in 2017 — up from 28% this year, according to 451 Research.

The analyst firm attributes this spending growth to a growing reliance on external sources of infrastructure, application, management and security services.

Although hosting and cloud providers frequently position themselves as primarily providers of infrastructure, the study found that just 31% of spending goes towards infrastructure services while nearly 70% of enterprise budgets for hosting and cloud is spent on other services.

>See also: Cloud will affect more than $1TN in IT spending by 2020, says Gartner

These include application services (42%), managed services (14%), security services (9%) and professional services for cloud enablement (5%).

The research discovered that a significant portion of hosting and cloud services spending is on unmanaged or self-managed infrastructure or application services.

Nearly half — 44% of infrastructure services spending and 49% of application services spending — goes on products that are bundled with additional managed or security services, it found.

“The markets for unmanaged IaaS and SaaS are dominated by large, hyper-scale vendors,” said Liam Eagle, research manager at 451 Research. “However, this spending trend indicates there is an appetite for the type of bundled services a broader market of managed service providers are well positioned to deliver.

“A strong opportunity exists for service providers offering a diversified set of hosting and cloud services that includes infrastructure and application hosting, as well as managed services and security services delivered around them.”

>See also: Public cloud spending to double by 2017 as storage market transforms study

The survey results indicate that enterprises use hosting and cloud services supplied by a broad range of provider types. Public cloud infrastructure providers, which are used by 69% of respondents, are the most common, followed by managed hosting providers, used by 26% of enterprises.

IaaS and SaaS usage is strong and these markets are dominated by small numbers of established leaders.

“The market for managed infrastructure and application services is a longer tail market, with greater opportunities for providers who emphasise expertise in operating, optimising and securing the infrastructure and application products they deliver,” said Eagle. “This includes opportunities to deliver services based on reselling infrastructure and application services from the largest IaaS and SaaS vendors.”

Avatar photo

Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

Related Topics