Cloudification – Budgets are Shifting Toward a “Cloud-first” and “Cloud-only” Approach

Cloudification and the Budget Shift

Gartner has recently predicted that by 2020, a corporate “no-cloud” policy will be as rare as a “no-internet” policy is today. CIOs will increasingly leverage a multitude of cloud computing providers across the entire IT stack to enable a huge variety of use cases and meet the requirements of their business unit peers. Indeed, the tides are shifting toward a “cloud-first” or even “cloud-only” policy. This is especially true as far as software design, planning and development goes. However, the notion is gradually being extended toward the wider IT landscape as companies advance with their digital strategies and fully leverage data-centric and IoT-based business models, and utilize 3rd platforms that interface a myriad of devices and data streams.

The share of wallet for Cloud Computing will increase by 44.2 percent by 2018

According to Gartner’s research, companies decrease their spending on conventional non-cloud deployments to boost their cloud activities and facilitate their digital strategies. Since 2011, the Infrastructure-as-a-Service (IaaS) market has been impressively growing by more than 40 percent in revenue per year, and is forecasted to again almost triple in size between 2016 and 2020. By then, the vast majority of virtual machines (VMs) will be deployed by IaaS providers.

As for share of wallet, the budget allocated for non-cloud IT will decline from 70.2 percent in 2016 to 57 percent by 2018, suggests research from IDC. In turn, the budget allocated to cloud-related deployments will increase from 29.8 percent in 2016 to 43 percent in 2018, representing a rise of 44.2 percent.

Figure 1: Shift in spending to provider site and cloud-based models

The public cloud market continues to skyrocket with IaaS to nearly triple, and PaaS and SaaS to roughly double by 2020

The huge growth that has been observed across the public cloud space over the past few years is going to continue in 2017, with revenues projected to total US$246.8 billion, up 18 percent compared to US$209.2 billion in 2016, according to Gartner’s projections. The strongest contributor will be the IaaS category, which is forecasted to grow by 36.8 percent in 2017 and reach US$34.6 billion. Software-as-a-Service (SaaS) is projected to grow 20.1 percent and reach US$46.3 billion. Overall, the public cloud space is projected to reach US$383.4 billion in revenues by 2020.

Table 1: Worldwide Public Cloud Services Forecast (Millions of Dollars)






Cloud Business Process Services (BPaaS)






Cloud Application Infrastructure Services (PaaS)






Cloud Application Services (SaaS)






Cloud Management and Security Services






Cloud System Infrastructure Services (IaaS)






Cloud Advertising






Total Market






Source: Gartner (February 2017)

DevOps is triggering further cloud adoption

Another driving force is application modernization. Companies are modernizing their application landscapes in an effort to provide a better, richer and more sophisticated customer experience. Very often, the cloud is the hosting location of first choice – initially for test and development, but increasingly so for production as well.

In this context, the agile development methodology is gaining popularity and enjoying high rates of adoption. Aiming to shorten release cycles, increase quality, reduce complexity and minimize costs, many CIOs are trying to take advantage of it. According to a recent study by Interop, eight out of ten IT executives have already implemented or are planning to implement DevOps. However, building the capabilities is not exactly child’s play. The prime barriers for adoption include a lack of demand from the business, followed by a lack of expertise and resources. However, those who succeeded listed tangible benefits (cost reduction or increased revenues) as well as better collaboration, more frequent releases, and higher quality and performance, among other things.

The changing role of the CIO – from operating IT to orchestrating IT and enabling new digital use cases

Going forward, the heavy cloud adoption will continue for the foreseeable future. The growing demand for developing mobile apps, deploying micro services, and utilizing data-centric business models as well as the emergence of industry-specific clouds and marketplaces will gradually lead to a “cloud-first” and “cloud-only” approach.

Yet the cloudification comes with a number of implications. One of the most prevailing challenges for CIOs will be the management of multiple disparate cloud computing and network service providers. The focus will change from operating IT toward orchestrating IT and enabling new digital use cases. This includes building a central data repository and cockpits to manage and monitor the estate, enforcing standards and global policies across a bunch of different providers, optimizing deployment processes to ensure swift commissioning and decommission of IT resources, developing an ecosystem with a range of strategic alliance partners rather than just having a client-supplier relationships, as well as enabling and facilitating new digital business models.

By Marc Wilczek

Marc Wilczek

Marc Wilczek is an Entrepreneur and Business Leader with more than 20 years of experience across the ICT industry. He’s passionate about all things #digital, with emphasis on Cloud, Big Data and IoT services.
He is an Alfred P. Sloan Fellow and holds master’s degrees from FOM Graduate School for Economics and Management in Frankfurt and London Business School.


The Cloud Above Our Home

The Cloud Above Our Home

Our Home - Moving All Things Into The Cloud The promise of a smart home had excited the imagination of ...
Protect Against Network Failures

Five Things Organizations Can Do To Protect Against Network Failures

Protect Against Network Failures It is no surprise that whenever there is an outage in a public or private cloud, ...
Mitigating Cyberattacks: The Prevention and Handling

Mitigating Cyberattacks: The Prevention and Handling

Mitigating Cyberattacks New tools and technologies help companies in their drive to improve performance, cut costs and grow their businesses ...
Through the Looking Glass: 2017 Tech and Security Industry Predictions

Through the Looking Glass: 2017 Tech and Security Industry Predictions

2017 Tech and Security Industry Predictions As we close out 2016, which didn’t start off very well for tech IPOs, ...
Max Contributor

Zero-Rating and Data Consumption

Zero-Rating The ordinary mobile user often feels the need to backup their personal files only after they’ve lost it. It’s ...
Salesforce Gets Serious About Its Security Ecosystem

Salesforce Gets Serious About Its Security Ecosystem

Security Ecosystem Salesforce is one of the fastest growing enterprise software companies in history and while security is a major ...


Where's Zuck? Facebook CEO silent as data harvesting scandal unfolds

Where’s Zuck? Facebook CEO silent as data harvesting scandal unfolds

Amid calls for investigation and a #DeleteFacebook campaign, company releases an official statement but its figurehead keeps quiet The chief executive of Facebook, Mark Zuckerberg, has remained silent over the more than 48 hours since ...
Lydia launches Lydia Premium

Lydia launches Lydia Premium

French startup Lydia announces two new things today. First, the company is launching a financial hub with multiple new products. Second, Lydia is announcing a new premium subscription to access those new features. “Today, we’re lucky enough to have ...
Demand for Augmented Reality/Virtual Reality Headsets Expected to Rebound in 2018, Says IDC

Demand for Augmented Reality/Virtual Reality Headsets Expected to Rebound in 2018, Says IDC

FRAMINGHAM, Mass., March 19, 2018 – Worldwide shipments for augmented reality (AR) and virtual reality (VR) headsets will grow to 68.9 million units in 2022 with a five-year compound annual growth rate (CAGR) of 52.5%, according ...
Uber said to be negotiating sale of self-driving tech to Toyota

Uber said to be negotiating sale of self-driving tech to Toyota

Uber  might begin selling its autonomous driving systems to outside companies, including major automakers, according to a new report from Japan’s Nikkei. The report claims that Uber has had talks with Toyota regarding supplying the automaker with ...
EU lawmakers to investigate alleged misuse of Facebook users' data

EU lawmakers to investigate alleged misuse of Facebook users’ data

BRUSSELS (Reuters) - EU lawmakers will investigate whether the data of more than 50 million Facebook users has been misused, the head of European Parliament said on Monday. Antonio Tajani urged the social media giant ...
Europe's New Privacy Law Will Change The Web

Europe’s New Privacy Law Will Change The Web

CONSUMERS HAVE LONG wondered just what Google and Facebook know about them, and who else can access their personal data. But internet giants have little incentive to give straight answers — even to simple questions ...