Cloud will Account for 8% of Tech Spend

News Article - Tuesday, 17 July 2012 14:45

By: Kerry Butters Category: Hosting

A new report has found that cloud technology will experience a surge in popularity between now and 2020, growing from the current spend of around $20bn to almost $150bn. This, according to the report, means that cloud will account for 8% of all technology spend.

"Cloud computing is at the intersection of two very powerful trends that have been playing out for some time: greater use of capability sourcing across the business value chain and the shift from capital intensive computing models to variable-use ones,” said Michael Heric, the lead author of The Five Faces of the Cloud study released by Bain & Company, a leading global business consulting firm.

"Once financial and strategic value proves to be repeatable, cloud will become a standard part of the business toolkit.”

The survey was carried out by Bains and asked 494 North American CIOs and IT decision makers. It found that "there is clear evidence that broad-based cloud adoption is underway”. The research asked a cross-section of industries of all sizes.

At the moment, only 10% of businesses have taken-up cloud, which accounts for around 50% of the cloud solutions market, whatever form it takes. However, take-up is seeing strong growth and it’s thought that over the next three years, almost 65% of the projected $20bn growth will come from companies that don’t currently use the technology.

Companies who are experiencing high-growth use 144% more cloud services than those who are growing slowly. It was also found that those CIOs that have entered their professional position utilise cloud within the past year and do 141% more of their business in the cloud.

This is opposed to longer standing CIOs, who have been in the position for more than six years and those with more diverse business experience are 82% more likely to use cloud services than those who have spent the majority of their career in IT.

The Bain survey also predicts that the cost of cloud will reduce by 30-40% of legacy technologies.

In the next 3 to 5 years, for certain workloads, cloud pricing will be 30 to 40 per cent lower than legacy technology, according to the report.

"Cloud providers have thus far been largely focused on developing solutions for the earliest adopters,” said Heric, a partner with Bain and Company.

"There is no guarantee that today’s cloud leaders will remain on top. If they cannot broaden the appeal of their solutions to meet the needs of new cloud adopters, other providers will step in to fill the void,” he added.

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