Cloud spending forecast to surge

Two new studies have highlighted the inexorable rise of the cloud, with spending on cloud infrastructure and associated activities expected to rise significantly over the coming months.

The first from Canalys, a global technology market analyst firm, focused on the global cloud services market for the first quarter of 2021.

The figures are certainly eye watering. For example, Canalys claims businesses spent 35% more on cloud infrastructure services in the first quarter of 2021, compared to the same period last year. In total, a staggering £29.52 billion was spent (the first Quarter 1 ever where spending exceeded £28.50 billion). Most of this was on:

• Data analytics
• Machine learning
• Data centre consolidation
• Application migration
• Cloud native development
• Service delivery

The acceleration of digital transformation over the last 12 months has certainly elevated demand for these services, with organisations seeking to adapt to new working practices, customer engagement and supply chain dynamics.

This staggering growth in all things cloud is also reflected in the revenues for the leading service providers. For example, AWS grew by 32% in Quarter 1 2021 as it accounted for 32% of the total cloud spend. Meanwhile Azure grew by 50% for the third consecutive quarter.

Much of the growth is undoubtedly down to the COVID-19 pandemic and the implementation of lockdowns, and it’s certainly not showing any signs of slowing as Canalys Research Analyst Blake Murray explained: “Organisations depended on digital services and being online to maintain operations and adapt to the unfolding situation during the lockdowns. Though 2020 saw large-scale cloud infrastructure spending, most enterprise workloads have not yet transitioned to the cloud. Migration and cloud spend will continue as customer confidence rises during 2021. Large projects that were postponed last year will resurface, while new use cases will expand the addressable market.”

Meanwhile, the second study, The Hybrid Shift: Managing an increasingly remote workforce, undertaken by Dynabook Europe, looked forward, as it sought to identify the IT spending patterns for the coming year. Polling more than 1,000 senior IT decision-makers at medium to large enterprises within the UK, France, Germany, Spain and the Netherlands, the study found that 65% of European respondents have access to increased IT budgets this year.

Changing work patterns and locations are the main drivers for this growth in IT spend. The study found that over two thirds (67%) of employees are expected to either work from home or from no fixed location following the pandemic, a figure which has increased from 53% before COVID-19.

Drilling down into the spending plans, it is evident that cloud systems and remote IT assistance represent the highest priorities for organisations across all markets and sectors, with 50% of respondents ranking both technologies top.

Unsurprisingly, cybersecurity infrastructure also featured prominently in the list of priorities for technology investment during the coming year, followed closely by IT training for staff.

The overall messages are clear: the pandemic and the resultant changes in working practices have helped to fuel the already high demand for cloud services, and this demand is set to increase even faster as customer confidence returns.