Gartner: Cloud is cannibalizing, fueling demand for outsourced IT services

Opportunity exists for providers to address hybrid cloud delivery environments
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Close to one-fifth of enterprises are using cloud computing for most production computing, and a similar percentage are using Storage as a Service (SaaS) for most or all storage requirements, according to a Gartner survey of 556 organizations in nine countries.

Gartner Research Director Bryan Britz said cloud services are cannibalizing and stimulating demand for outsourcing IT services spending at the same time.

"[P]ublic cloud adoption offers service providers the opportunity to accelerate externalization of spending for the nonpublic cloud workloads and IT operations and service management responsibilities in tandem with clients pursuing a public cloud initiative," Britz observed.

The Gartner survey found that public cloud adoption varies by service. Infrastructure as a Service (IaaS) is moving from lower-risk pilot programs into production environments.

Platform as a Service (PaaS) adoption indicates the growing importance of public cloud services for enterprises that are adopting cloud infrastructure to support their business needs. Gartner noted that current and anticipated PaaS adoption rates are indicators of an accelerating move to the cloud and represent an opportunity for service providers to deliver PaaS-oriented products.

SaaS adoption, particularly in large enterprise application suites, is forecast by Gartner to reduce the potential market for application outsourcing. At the same time, SaaS adoption in the near term offers consulting and implementation services opportunities for IT services providers, as well as ongoing integration and configuration business.

The research firm predicts the move to SaaS will drive additional revenue to the application outsourcing market by drawing applications to external, cloud-based implementations where they would otherwise be considered only for internal deployment.

A clear majority of enterprises plan to increase external spending as a result of public cloud adoption through a combination of accelerated outsourcing of responsibilities and net new adoption of external services. Close to three-quarters of cloud adopters expect to increase external spending on end-user computing infrastructure management, and 70 percent plan to increase external spending on application development.

Many of these enterprises will be first-time buyers of these established IT services, Gartner related. Fewer firms plan to reduce spending during the next three years for established external IT services as a result of public cloud strategies. Reduced spending is most noticeable in the data center, where 14 percent of respondents plan to decrease external spending.

"Opportunity exists for providers able to address, directly or through an ecosystem of partnerships, the broad spectrum of hybrid [cloud] delivery environments that will permeate most organizations in the coming years. Threats abound for providers that are too narrowly focused on legacy systems and legacy approaches," Britz advised.

For more:
- see Gartner's release

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