There are clouds on the horizon for 2018 – lots of them. According to new data from 451 Research, companies are spending more than ever on hybrid cloud environments and multi-cloud services and they’re investing in all types of cloud infrastructures.  Nearly 90% of large companies surveyed say they’re boosting their cloud budgets by at least 20% this year: budgets for large organizations are rising an average of 19.3%, and small companies around 23.5%.

What they’re buying is a mix of cloud services and infrastructure, rather than investing in just one type of cloud environment. Organizations are creating mixes of private and public cloud options, selecting the best solutions for different application needs.

“The journey to the cloud is not a singular event,” said Melanie Posey, research VP for 451 Research, who recently presented the research in the webcast 2017 Cloud Market Overview.  She noted that two-thirds of the organizations surveyed are using multi-cloud and/or hybrid cloud capabilities, with larger organizations most likely to have mixed environments (82%) and smaller companies somewhat less likely (60%).

SaaS and IaaS Lead Cloud Implementation

The public Software-as-a-Service (SaaS) cloud is the most common deployment model and it continues to gain ground. The percentage of organizations using SaaS grew from 66.7% in 2016 to nearly 76% this year.  Public Infrastructure-as-a-Service (IaaS) comes in second with 46% of organizations using IaaS in 2017, up from 37.7% in 2016.

But there is still plenty of demand for private hosted and private on-premise cloud environments, though growth is much slower.  On-premise clouds were in use by 40.4% of organizations, up slightly from 39.4% in 2016, and hosted private clouds squeaked up to 33.3%, from 32.6%.

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“Private cloud options are still very much part of the IT mix, and usage of on-premise private clouds is steady, particularly among larger organizations with 10,000 or more employees,” said Posey.

The need for private clouds is strongest at organizations with large enterprise applications, such as ERP, where there’s already costly hardware and software investments or a desire to keep the data and application close at hand.

“Companies are taking a cloud first approach, but systems of record often can’t leave the on-premise environment,” she explained, “so that keeps private cloud growth fairly steady, and leads to these hybrid implementations.”

Top Cloud Drivers for Large and Small Companies

There are many reasons why organizations migrate to private and public clouds. For larger firms, those with more than 1,000 employees, the top drivers are time-to-market and agility, cited by 43% of companies, reduced operating costs (41%), and scalability (37%).  For smaller firms, on the other hand, uptime and availability was the top driver, at 36%, followed by operating costs (35%) and less internal management (31%).

Time-to-market is a particularly strong motivation, as it directly affects an organization’s ability to be competitive in rapidly changing markets. Cloud services offer faster access to applications essential to a company’s growth strategy.

“With off-premise cloud services, [organizations] gain access to new tools, platforms and service providers who can guide the organization in digital transformation,” said Posey.

Companies of all sizes are also spending on managed services, as well as on professional services and security services. Together, they make up 28% of corporate cloud budgets.

Posey noted that more cloud providers are augmenting their cloud solutions with services to make cloud migration easier. “A lot of providers are offering assessments, recommendations on what to migrate to the cloud, and overall strategies on how to take advantage of the cloud environment.”

Cloud Customers Seek Expert Guidance

What customers want from their providers varies greatly; end-users interviewed for the report named several things ranging from enterprise level technical support and scalability to strong security and help with compliance. But based on responses, the leading desire appeared to be cloud expertise and advice tailored to the customer’s industry and business.

One end user described his key selection criteria as “how well the vendor understands our business models, thereby allowing us to focus on our core objectives…. We would like the vendor to be working with us as a trusted partner who can create long-term road maps for us.”

 

Denny Heaberlin is the Director of Strategic Alliances at TierPoint.  His team is responsible for the mature go-to-market strategies with a select group of key OEM alliance partners, managing merger and acquisition partners and coordinating analyst relations.  Denny has been part of the TierPoint team for nearly a decade and enjoys keeping pace with the ever-changing world of technology.

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