IaaS, PaaS Providers Big Winners in Enterprise Cloud Strategy Shift

Brought to you by Talkin’ Cloud

By 2020, cloud-first or cloud-only will be the norm at enterprises, according to a new report by Gartner released on Wednesday.

Gartner said that these cloud-friendly policies will replace the “defensive no-cloud stance that dominated many large providers in recent years” with hybrid cloud being the most common implementation.

The claim isn’t particularly ground-breaking when you consider how quickly enterprises are already adopting hybrid cloud and seeing advantages from it. A recent study by IBM found that 26 percent of hybrid cloud implementers said they are gaining a competitive advantage through hybrid cloud.

According to Gartner, by 2019 more than 30 percent of the 100 largest vendors’ new software investments will have shifted from cloud-first to cloud-only. Cloud-first refers to an organization considering cloud before any other type of deployment, usually for new workloads.

This will support a massive growth in cloud services, with Gartner predicting that by 2020 more compute power will have been sold by IaaS and PaaS cloud providers than sold and deployed into enterprise data centers. IaaS revenue will grow more than 25 percent per year through 2019.

“Aside from the fact that many organizations with a no-cloud policy actually have some under-the-radar or unavoidable cloud usage, we believe that this position will become increasingly untenable,” Jeffrey Mann, research vice president at Gartner said in a statement. “Cloud will increasingly be the default option for software deployment. The same is true for custom software, which increasingly is designed for some variation of public or private cloud.”

Enterprise employees are already using a staggering number of cloud applications. In Q1 2016, employees used an average of 935 cloud apps, according to a report by Netskope.

“More leading-edge IT capabilities will be available only in the cloud, forcing reluctant organizations closer to cloud adoption. While some applications and data will remain locked in older technologies, more new solutions will be cloud-based, thus further increasing demand for integration infrastructure,” said Yefim V. Natis, vice president and Gartner Fellow. “Rigid organizations cannot produce agile IT solutions. As delivery shifts more to the cloud, most IT organizations will have to reorganize to reflect the business realities of cloud computing: continuous innovation and change, pervasive integration, competing with cloud providers for some initiatives, and crucial prevalence of influence over control in IT’s relationship with lines of business. While historically the greatest competitor to external service providers has been internal IT, with spend shifts, structural reorganizations and the business realities mentioned above, cloud providers will be in the position to gain the upper hand.”

In addition to delivering the most compute power, IaaS providers will deliver the majority of virtual machines by 2019 if Gartner is right. And by 2020, revenue for compute IaaS and PaaS will surpass $55 billion – flying by server revenue.