2017 IT Budget Prediction: 34 Percent Will Go to Cloud Services

By: Jacqueline Lee| - Leave a comment

According to a new 451 Research report titled “Voice of the Enterprise: Hosting and Cloud Managed Services,” chief information officers (CIOs) and their IT teams plan to spend more than one-third of their budgets (34 percent) on cloud services in 2017 — a 6-percent increase from 2016 levels.

Seventy percent of IT budget dollars devoted to cloud will go toward software-as-a-service (SaaS), with the remaining 30 percent devoted to infrastructure services. In infrastructure services, hyperscale providers including IBM Softlayer remain dominant, with Salesforce leading the SaaS space. Preferred applications for file sharing and productivity include Microsoft 365 and Dropbox.

According to InformationWeek, the study also found that cloud transitions are initiated from the top as executives begin to recognize the cost shifting, savings and flexibility benefits of cloud services. This C-suite involvement means fewer ad hoc cloud purchases and a more holistic, strategic approach. The study found that 44 percent of infrastructure spending and 49 percent of application spending will go toward products bundled with other security or managed services.

Challenges Beyond IT Budget Constraints

For many CIOs, the biggest cloud adoption challenge involves updating the skills of their current IT workforce. The “2016 State of the CIO Survey” found that 49 percent of CIOs expect to experience IT skills shortages, and 6 out of 10 believe skills shortages could keep their organizations from keeping up with the pace of change, according to CIO.

Liam Eagle, research manager and lead author of the 451 Research survey, told InformationWeek that it takes time and effort for IT pros to learn to do their jobs differently. “If they’re focused on storage architecture, they have to figure out how to put those skills to work in the cloud. If they’re administering databases, they’ll have to figure out how to do that work in the cloud,” said Eagle. “One of the obvious conclusions is that IT practitioners are having to learn to apply the skills they already have in cloud-based environments.”

Nine percent of IT executives surveyed plan to add new personnel to cover the skills gap, but most expect to train their existing workforces to get the most from the new technologies. Bundled services and managed hosting offerings are also helpful in smoothing the skills gap. Twenty-six percent of CIOs take advantage of managed hosting services and 70 percent turn to large public cloud providers that provide a range of bundled products.

Other 2017 Predictions

Although most IT budget allocations for cloud services focus on productivity, web presence and web hosting, Eagle predicted that companies will expand into other applications. He sees an especially bright future for applications that help enterprises leverage big data.

Eagle expects to see growth in data analytics, file storage, business intelligence, database-as-a-service (DBaaS) and data warehousing within the next 12 months. He also expects cloud services providers that offer a one-stop range of services to win most new business.

“The market for managed infrastructure and application services,” he said, “is a longer-tail market with greater opportunities for providers who emphasize expertise in operating, optimizing and securing the infrastructure and application products they deliver.”

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About The Author

Jacqueline Lee

Freelance Writer

Jacqueline Lee specializes in business and technology writing, drawing on over 10 years of experience in business, management and entrepreneurship. Currently, she blogs for HireVue and IBM, and her work on behalf of client brands has appeared in Huffington Post, Forbes, Entrepreneur and Inc. Magazine. In addition to writing, Jackie works as a social media manager and freelance editor. She's a member of the American Copy Editors Society and is completing a certificate in editing from the Poynter Institute.

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