Who wins and who loses as the cloud moves out of IT

IT spending may appear to be dropping, but it's actually shifting from IT to the business

Who wins and who loses as the cloud moves out of IT

Gartner says worldwide IT spending will total $3.5 trillion this year, a 0.5 percent decline from 2015. It won't get better over the next few years, with Gartner predicting that global IT spending will rise only 2 to 3 percent from 2017 to 2020.

How can that be possible given the ever expanding importance of technology to modern business?

The rise of the cloud is a big reason: Tech costs are becoming cheaper thanks to the cloud's lower prices and greater efficiency.

The other big reason is that as companies increasingly adopt the cloud, they do so by using cloud services that best serve the business units. Often, that's considered a business-unit cost, not an IT cost. Thus, an increasing portion of the IT budget is no longer in IT, and the growth of IT spending looks smaller than it is.

The two trends are happening at the same time, which makes the change from the historic pattern of steady IT growth look so dramatic. However, though IT spending is going down, the business is getting more value from IT (whoever owns it) using this model.

Who are the winners and losers of this move? The losers are vendors that live off centralized IT, such as the big enterprise software and hardware companies, as well as consulting firms.

The winners are the business units that have dedicated technology resources, especially those that leverage the more agile and cheaper resources of cloud computing.

Central IT may lose as well because their portfolio shrinks as some of it moves to business units. Or central IT may win because it still provides critical unified governance and perhaps cloud service brokering -- that gives IT more value to the business, not less. Whether IT wins or loses from this shift depends on where IT's value lies.

The declining IT spend reported by the likes of Gartner and IDC may not be bad news. It's certainly good news for cloud computing, as well as for the business units that have been second-class citizens in the past.

Copyright © 2016 IDG Communications, Inc.