Here's where end-user organizations can be expected to park their cloud dollars.

December 18, 2018

9 Slides

By Terry Sweeney

Not whether, but when: That’s how most IT managers view the cloud’s prospects for hosting or managing their apps, systems and services. And they don’t need a crystal ball to arrive at this conclusion; they can look at line items in their technology budgets from the last 10 years to support the thesis that more of the IT dollar is going to the cloud.

Recent user surveys help flesh out the trend. Some 73 percent of IT buyers said they have at least one application or a portion of their computing infrastructure in the cloud, according to IDG. On average, respondents said 30 percent of their IT budget is devoted to cloud-based services; software as a service (SaaS) accounts for 48 percent of that cloud spending (up from 45 percent in 2016), along with infrastructure as a service (IaaS) at 30 percent, and platform as a service (PaaS) at 21 percent.

Throughout the fourth quarter of 2018, as part of our “In Focus” series, we are featuring a series of galleries designed to help partners grow their businesses in 2019 and beyond.

Small and midsize businesses (1,000 employees or fewer) expected to spend $889,000 on cloud in 2018, a whopping increase from $286,000 in 2016, IDG added. Respondents cited justifications like improving the speed of IT delivery, greater flexibility to changing markets and enabling business continuity in the wake of disasters and emergencies.


Forrester’s Andrew Bartels

C-suite executives like cloud services for all the obvious reasons: They can reduce headcounts and lend more predictability to service charges and reduce, if not eliminate, exorbitant (re-)licensing fees for software.

Cloud services also help end-user organizations’ balance sheets: For accounting purposes, cloud can be designated as an operating expense, rather than a capital expense. Recent changes to the federal tax code let companies account for cloud in either category, depending on the expenditure, according to Andrew Bartels, VP of research at Forrester Research.

All of that is welcome news as end-user organizations, cloud providers and channel partners prepare for a 2019 economy that’s predicted to be less robust than 2018. Interest-rate changes, trade wars and confused stock markets all undercut business confidence, resulting in less spending overall.

Whereas 2018 distinguished itself with a good balance between consumer and business spending to fuel the economy, 2019 is likely to be a different story, according to Bartels. In 2018, consumers accounted for about two-thirds of all spending, he explained.

“In 2019, consumers will have to spend closer to 90 percent to keep the growth growing,” Bartels said. “That’s going to be a significant difference.”

Still, that may be fuel to cloud’s fire. Forrester predicts that cloud will continue to thrive. Cloud spending is expected to grow 20 percent or more annually and should account for more than 15 percent of software and services spending in 2019, the consultancy said.

Where, then, are companies spending on cloud services? What follows in our selections run the gamut from the established to the newly emerging. What function, service or technology can’t be transformed in to the X-as-a-service model? Very little, as it turns out, if there’s money to made — or saved.

Click through our gallery below to see where end-user organizations can be expected to park their cloud dollars.

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