Twenty-eight percent of spending within key enterprise IT markets will shift to the
cloud by 2022, up from 19 percent in 2018, according to Gartner, Inc. Growth in
enterprise IT spending on cloud-based offerings will be faster than growth in
traditional, non-cloud IT offerings. Despite this growth, traditional offerings
will still constitute 72 percent of the addressable revenue for enterprise IT
markets in 2022, according to Gartner forecasts.
“The shift of
enterprise IT spending to new, cloud-based alternatives is relentless, although
it’s occurring over the course of many years due to the nature of traditional
enterprise IT,” said Michael Warrilow, research vice president
at Gartner. “Cloud shift
highlights the appeal of greater flexibility and agility, which is perceived as
a benefit of on-demand capacity and pay-as-you-go pricing in cloud.”
More than $1.3 trillion in
IT spending will be directly or indirectly affected by the shift to cloud by
2022, according to Gartner (see Table 1). Providers that are able to capture
this growth will drive long-term success through the next decade.
Gartner recommends that
technology providers use cloud shift as a measure of market opportunity. They should assess growth rates and addressable market size
opportunities in each of the four cloud shift categories: system
infrastructure, infrastructure software, application software and business
process outsourcing.
Table 1: Cloud Shift
Proportion by Category
|
|
2018
|
2019
|
2020
|
2021
|
2022
|
|
System infrastructure
|
11%
|
13%
|
16%
|
19%
|
22%
|
|
Infrastructure software
|
13%
|
15%
|
17%
|
18%
|
20%
|
|
Application software
|
34%
|
36%
|
38%
|
39%
|
40%
|
|
Business process
outsourcing
|
27%
|
28%
|
29%
|
29%
|
30%
|
|
TOTAL
|
19%
|
21%
|
24%
|
26%
|
28%
|
Source: Gartner (August
2018)
The largest cloud shift prior to 2018 occurred in application software, particularly driven by customer relationship management (CRM),
according to Gartner. CRM has already reached a tipping point where a higher
proportion of spend occurs in cloud than in traditional software. This trend
will continue and expand to cover additional application software segments,
including office suites, content services and collaboration services, through
to the end of 2022. Application software will retain the highest percentage of
cloud shift during this period.
By 2022, almost one-half of
the addressable revenue will be in system infrastructure and infrastructure
software, according to Gartner. System infrastructure will be the market
segment that will shift the fastest between now and 2022 as current assets
reach renewal status. Moreover, it currently represents the market with the
least amount of cloud shift. This is due to prior investments in data center
hardware, virtualization and data center operating system software and IT
services, which are often considered costly and inflexible.
“The shift to cloud
until the end of 2022 represents a critical period for traditional
infrastructure providers, as competitors benefit from increasing cloud-driven
disruption and spending triggers based on infrastructure asset expiration,” said Mr. Warrilow. “As cloud becomes increasingly mainstream, it will influence
even greater portions of enterprise IT decisions, particularly in system
infrastructure as increasing tension becomes apparent between on- and
off-premises solutions.”
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