News

IT Complexity, Costs Driving Cloud Adoption

• By David Nagel
• June 23, 2010

Internet cloud-based services are getting a second look as organizations confront their information management burdens and an economic downturn, according to research firm Gartner.

Across all sectors, information management challenges have been weighing increasingly heavily on in-house IT departments. Coupled with the economic difficulties of the last couple years, these challenges are pushing IT in some profoundly new directions, Gartner explains in a new report released this week. The result will be an swing toward cloud-based services over the next several years, the report predicts.

"The scale of application deployments is growing; multi-thousand-seat deals are increasingly common," said Gartner Research Vice President Ben Pring in a released statement associated with the report, "Forecast: Public Cloud Services, Worldwide and Regions, Industry Sectors, 2009-2014."

This increased focus on cloud services represents a conceptual shift for IT, Pring added.

"IT managers are thinking strategically about cloud service deployments; more progressive enterprises are thinking through what their IT operations will look like in a world of increasing cloud service leverage. This was highly unusual a year ago," Pring stated.

In 2009, expenditures on cloud services worldwide and across sectors totaled $58.6 billion. That figure is expected to jump nearly $10 billion to $68.3 billion by the end of this year and to $148.8 billion in 2014, according to the report. The report also indicated that software as a service (SaaS), platform as a service (PaaS), and infrastructure as a service (IaaS) expenditures by enterprises will reach $112 billion over the next five years.

Pring partially attributed the trend to the growing need of IT organizations to control costs.

"After many years of germination, most notably in the SaaS arena, the core ideas at the heart of cloud computing -- such as pay for use, multi-tenancy and external services -- appear to be resonating more strongly," Pring said. "In part, this can be explained by macroeconomic factors. The financial turbulence of the last 18 months has meant every organization has been scrutinizing every expenditure. An IT solution that can deliver functionality less expensively and with more agility (remembering that time is money) is hard to ignore against this backdrop."

IT organizations are also looking to cloud services because in-house management of "complex, custom, expensive solutions" has become burdensome, according to Gartner.

The United States is currently the largest consumer of cloud services worldwide, accounting for 60 percent of overall expenditures in 2009 and 58 percent in 2010, according to the report. Gartner predicts that this percentage will further drop to 50 percent by 2014. U.S. expenditures on cloud services will grow from $35.16 billion in 2009 to $74.4 billion in 2014.

Financial services and manufacturing will be early adopters of cloud services, along with "communications and high-tech industries," according to the report. The public sector, Gartner said, "is also clearly interested in the potential of cloud services and its share of the overall market."

A few of the potential barriers to more rapid adoption cited by Gartner were the perception of security vulnerabilities inherent in cloud computing, service availability, and "vendor viability and maturity."

"Many enterprises may be examining cloud computing and cloud services, but are far from convinced that it is appropriate for their requirements," Pring said. "We expect that this will be a significant opportunity for existing IT services players to evolve their current offerings -- such as outsourcing, system integration, development, etc .-- to become cloud-enabled and try to combine the best of the two worlds, namely traditional IT services and cloud computing."

The full report is available now for $1,495. Further information can be found here.