Public cloud acceleration due to Covid-19
Covid-19 is accelerating the shift to cloud computing, according to Flexera’s 2021 State of Tech Spend Report. Moreover, this public cloud acceleration will probably continue because in almost half of the organizations the willingness to move to the cloud has further increased. In particular public cloud is benefiting. The majority of respondents increased their spending on software-as-a-service and the uptake on (other) public cloud services was almost this widespread too.
More public, less private cloud
At the same time, the change in spend in private cloud is falling behind. Furthermore, on balance, the sentiment about on-premises software and servers is negative, by now. More than a third has already cut spending on these categories. The shift is also visible when looking at data centers. In last year’s survey, 2 out of 3 respondents expected to reduce the number of data centers. This time 27% said they will reduce this number “significantly” in 2021, whereas a further 7% plans to eliminate them completely this year.
About half of the companies expect to increase cloud spending in 2021 and another 20% expect to maintain their current levels. At the same time, as a result of the economic downturn, a significant portion of companies anticipate overall IT budget reductions. Consequently, a quarter of the respondents indicate “cost savings” to be their biggest IT initiative for 2021. This is a 50% increase from 2020. In the 2020 survey 4 out of 5 respondents indicated “managing cloud spend” is a challenge. Looking at the current intent to increase cloud spend, this is unlikely to change in the coming year(s).
Some stand to gain, others are falling behind
Looking ahead, AWS and Microsoft are likely to be the biggest winners from this public cloud acceleration. After all, the majority of companies expect to increase their spend with these companies. Salesforce, Google, ServiceNow and VMware will grow as well. These gains will come at the expense of Oracle and IBM. When looking at the response, especially the licensed software business may experience a (further) reduction in 2021.
It will be interesting to see how these shifts will surface in the next edition of Gartner’s Magic Quadrant for Cloud Infrastructure and Platform Services which will be published later this year.