Gartner Sees $1 Trillion Shift In IT Spending To Cloud

The shift in IT spending from traditional hardware and software to cloud computing will continue over the next five years.

Charles Babcock

July 25, 2016

2 Min Read
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IT spending is undergoing a shift from traditional sources, such as direct server and software license purchases, into public cloud computing. The amount of money IT will spend on cloud services this year is $114 billion, and will grow to $216 billion in the year 2020, according to a report released by Gartner.

That means the impact of the shift will amount to a total of $1 trillion over the course of the next five years. The transition is occurring at a rate of about 2% a year, with IT budget dollars moving away from the enterprise data center assets and into the public cloud.

Such a shift will still leave on-premises IT spending predominant for several years to come. Compared to that $216 billion to be spent on public cloud services in 2020, Gartner sees total IT spending that year amounting to $3.9 trillion.

Gartner also projects that IT budgets as a whole will grow at a 2% compound annual growth rate between 2015 through 2020. The firm also projects traditional IT spending will remain essentially flat after 2016, while cloud spending continues to grow.

The fact that cloud spending is growing comes as no surprise. Every analyst group has pointed out that fact over the last three years, but the Gartner report, issued to subscribers May 18 and made public July 21, quantifies the shift in terms of the IT budget more precisely than has been done before.

That $1 trillion shift "makes cloud computing one of the most disruptive forces of IT spending since the early days of the digital age," according to Gartner's summary on the report. Gartner aired the report summary as part of its build-up to the firm's IT Financial, Procurement & Asset Management Summits 2016 in London Sept. 12-13. (InformationWeek obtained a full copy of the document.)

"The market for cloud services has grown to such an extent that it is now a notable percentage of total IT spending," said Ed Anderson, Gartner research vice president and author, along with analyst Michael Warrilow, of "Market Insight: Cloud Shift -- The Transition of IT Spending from Traditional Systems to Cloud."

Read the rest of this article on InformationWeek.

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