Spending on hosting and cloud services among enterprises is growing, both in terms of overall value and being part of total IT spending, and also grows in almost all sectors in terms of company size, geography and vertical market.
Businesses expect to spend both hosting and cloud services that will surpass overall IT spending growth by 25.8% this year, according to a 451 Research report. Spending on cloud services and hosting will reach 12% this year.
This trend, the report states, will apply to almost all vertical markets and will be felt in companies of all sizes. However, this trend will be more pronounced in large enterprises, where an average of 33.3% growth in hosting and cloud services is expected.
Increased cloud spending and hosting
In addition, the 451 Research study saw that nearly nine out of ten (88%) respondents expect their budgets for hosting and cloud services to increase each year, compared to 70% of respondents who said that expect to get more money year after year to spend on IT.
- Source: Vecdis. 451 Research data
On the other hand, it should be noted that only 9.5% respondents expect a decrease in hosting and spending on cloud services, compared to 22.3% that expects a decrease in total IT spending.
“We see that the pace of investment in hosting and cloud services is greater than investment in IT in general, which means that hosting and cloud services are becoming a focus of INVESTMENT in IT, both through new projects and load migration “&0) existing work,” says Liam Eagle of 451Research. “Even some companies that are reducing IT spending are increasing spending on hosting and in the cloud, which means service providers shouldn’t forget about companies that want to reduce IT costs.”
Reasons driving increased spending on hosting and cloud
According to the 451 Research study, increased spending on hosting and cloud services is being driven primarily by:
- Migrating workloads from on-premises environments to the cloud.
- The aggregation of a new resource capacity due to the growth of the business.
- New IT initiatives.
- Companies that buy additional services that they didn’t previously have.
These reasons vary significantly depending on the size of the company, smaller companies (up to 249 employees) seek off-site services to increase their growth capacity, while medians (250-999 employees) and large enterprises (more than 10,000 employees) focus primarily on migrating workloads from on-premises to the cloud.
“Significant differences between different sizes of companies both in terms of adoption rates and in the reasons that drive spending reinforce the idea that the size of the company is not only a difference in category, but an indication of markets with totally different hosting features and cloud services,” says Eagle. “This gives suppliers a compelling business case for specialization and is one of the reasons why the cloud and hosting services market is served by a wide variety of providers.”
Growth in multi-cloud support
Research from 451 Research also revealed a growing willingness among business IT buyers to take a multi-cloud approach to supplying services and technology, with many respondents wanting to share plans to increase their spending on multiple vendors, rather than a single vendor.
In addition, the research also saw that the public cloud and SaaS providers such as Microsoft Azure and Amazon Web Services (AWS) are being adopted by most respondents.
However, approximately 50% of respondents indicated that they are using a provider outside the top 10. Azure and AWS lead respondents’ budget allocation by a significant margin, leaving Azure (24.8%) ahead of AWS (20.2 %) by several percentage points. Respondents, on average, aim to increase spending on both providers, including increased spending in the public cloud and hosting providers.
Verizon sells hosting and cloud business to IBM
Verizon, one of the cloud service providers takes an unexpected turn and has announced that it has sold its hosting and cloud business to IBM.
According to George Fisher, SVP and group president of Verizon Enterprise Solution, the goal is to become the world’s leading provider of managed services, enabled by an ecosystem of Verizon’s best technology solutions and a network of leading suppliers. And that precisely that “journey to innovation” led them to join forces with IBM.
“This operation is a great opportunity for Verizon Enterprise Solutions and our customers. This will allow us to focus on helping our customers securely connect to cloud resources and use apps that have been developed for the cloud,” Fisher said.
With all this, the manager noted that Verizon and IBM will work together on a number of strategic initiatives including cloud networks and services.
“This is a unique alliance between two technology leaders to support global organizations on their way to profiting from a cloud investment,” Fisher said.
The company announced that it will send a notification to affected users, however, it does not anticipate any impact on the services due to the agreement. The transaction figure is unknown, but the transaction is expected to close by the end of the year.
