Cloud Shift will affect more than $1 trillion in IT spending by 2020: Gartner

IT asset managers must identify risks and opportunities and adjust vendor management styles.

More than USD 1 trillion in IT spending will be directly or indirectly affected by the shift to cloud during the next five years, as per Gartner. This will make cloud computing one of the most disruptive forces of IT spending since the early days of the digital age.

IT spending is steadily making a – cloud shift - shift from traditional IT offerings to cloud services. The aggregate amount of cloud shift in 2016 is estimated to reach USD 111 billion, increasing USD 216 billion in 2020, as per Gartner.

The highest shift (43%) will be in business process outsourcing which will be replaced by BPaSS.

In addition to the direct effects of cloud shift, many markets will be affected indirectly. Identifying indirect effects can help IT asset and purchasing managers ensure they are getting the best value out of new expenditure and are protected against risk, as well as assisting them to exploit the new opportunities caused by cloud shift.

For example, instead of buying operating systems (OSs) for each user in the traditional way, many will be provided as OS images - particularly with the use of containers for next-generation applications. Another example is that enterprise storage needs could be met with a lower up front cost and far more scalability by switching to cloud solutions instead of buying dedicated hardware.

Legacy Segment
Cloud Segment
Market Size 2016
Cloud Shift 2016
Cloud Shift Rate Through 2020
Business Process Outsourcing BPaaS 119 billion 42 billion 43%
Application Software SaaS 144 billion 36 billion 37%
Application Infrastructure Software PaaS 177 billion 11 billion 10%
System Infrastructure IaaS 294 billion 22 billion 17%

(Source - Gartner)

Cloud shift is about how organizations pursue a new IT architecture and operating philosophy, they become prepared for new opportunities in digital business, including next-generation IT solutions, such as the Internet of Things.

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