Cloud spending set to outpace traditional on-prem

Enterprises will confront the tipping point of cloud spending surpassing traditional IT costs in 2020. Is this too early or too late? A few thoughts to consider

Cloud spending set to outpace traditional on-prem
BlueBay2014 / Getty Images

According to IDC, in 2019 the public cloud saw little change in market share, making up just more than 30 percent of the overall cloud IT infrastructure market. Of course, this is likely to grow significantly, expected to reach almost 40 percent by 2023.

However, it’s a bit of a surprise that IDC is also expecting public and private cloud spending to outperform “traditional IT spending” in 2020. We can define traditional as anything that’s not a private or public cloud. Indeed, in 2019 we saw the balance nearly equal at 49.8 percent for public and private cloud. This milestone will be easily bypassed this year.

Although many who follow the hype thought perhaps this shift took place a few years back, this is actually much earlier than I expected, and perhaps faster than most enterprises can manage. 

Part of this is a bit of “cloud washing,” considering that those with older, on-premises solutions have now rebranded their technology as “private clouds.” Although some of the technology is indeed private cloud technology, many so-called private cloud solutions predate cloud computing and don’t support cloud computing features such as auto- and self-provisioning or supporting automated elastic scalability. You would have to audit all of those technology providers who claim “private cloud” to determine how many of those exist, which is not likely to happen. 

Putting that issue aside for now, the fact that we’re spending more on cloud computing than traditional on-premises solutions has a few considerations for enterprise IT as we reach the tipping point. Here’s my take:

  • Most organizations are behind on skills and cultural changes needed to support cloud computing. Indeed, if skills are not updated to meet the needs of cloud-based solutions, they have no chance of succeeding. Most cloud computing failures can be traced to enterprises neglecting human factors.
  • Most enterprises have no idea how to secure cloud-based solutions. Indeed, they are approaching cloud security using on-off tactical solutions that end up being a complex mess after a few hundred applications are migrated to public or private clouds. Missing the ability to select and build common security services and management, most will have to do so retroactively—perhaps after a major breach. 
  • Finally, the “forced march to the cloud" is underway. Most of the R&D dollars are going into cloud-based solutions, not traditional computing. Traditional solutions will soon lack the features, functions, and updates enterprises may need, including security technology. They are being built and deployed on cloud technology instead, which means that you have to move there to take full advantage.

All in all, this is concerning for some, and exciting for others. The enterprises that have dragged their feet in moving to the cloud perhaps need to get going. No matter if you want to or not, there seems to be little alternative if you’re looking for best-of-breed technology, even if you don’t typically follow what’s trendy.

Copyright © 2020 IDG Communications, Inc.