IT Budgets to Prioritize Hosting, Cloud Services in 2017

By Steve Anderson
Contributing Writer

Anecdotally, it's been clear for some time that businesses have been spending a lot more time and money on cloud-based systems and hosting alike. It hasn't been immediately clear just how much has gone into such operations, and a new study from 451 Research (News - Alert) helps underscore how far this market has gone already and how much farther it's likely to go in the near term.

The 451 Research report notes that, right now, enterprises are spending 28 percent of total IT budgets on hosting and cloud services. That's no small quantity, but in 2017, that number is set to jump to 34 percent, from a little over a quarter to just over a third. Projected beneficiaries of this newfound largesse include infrastructure systems, cloud management and applications, as well as security systems.

Only about 31 percent of spending is going to infrastructure services, with the rest of that budget mainly committed to other services. Of the remainder, 42 percent goes to application services, while 14 percent goes to managed services. Meanwhile, 9 percent goes to security services and 5 percent goes to professional services for bringing cloud systems online.

Unmanaged or self-managed infrastructure and application services take a large portion of the budget for hosting and cloud services. Public cloud infrastructure providers proved to be the largest portion of the spending, with 69 percent citing that as a source. Managed hosting providers picked up most of the slack at 26 percent.

451 Research’s research manager and the study's lead Liam Eagle commented, “The market for managed infrastructure and application services 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. This includes opportunities to deliver services based on reselling infrastructure and application services from the largest IaaS and SaaS (News - Alert) vendors.”

Cloud-based services are offering a lot of value to businesses all over, particularly smaller businesses who don't want to engage in manual care and feeding of infrastructure systems. From cloud-based videoconferencing to analytics tools, there are a lot of options for those interested in cloud to get in on, and increasingly, businesses are on hand to provide these tools. If the 451 Research results suggest anything, it's that there's a gold rush in the cloud to provide services, and businesses are more receptive than ever to bringing in cloud-based systems. The budget numbers make that much perfectly clear, and those who do the best job of distinguishing themselves from the competition will produce the best results.

A new gold rush ahead in cloud-based systems will likely prove welcome news, and based on the numbers it may not stop in 2018, either. The iron is clearly heating up, and the time to strike is at hand.