Reseller News

​Cloud services spend set to rise as IT budgets realign

Resources bundled with management and security services make up nearly half of infrastructure and application services spending.

Enterprises currently spend 28 per cent of total enterprise IT budgets on hosting and cloud services, with the number expected to climb to 34 per cent in 2017.

Findings from 451 Research indicate a growing reliance on external sources of infrastructure, application, management and security services.

Although hosting and cloud providers frequently position themselves as primarily providers of infrastructure, research shows that only 31 per cent of spending goes towards infrastructure services, while nearly 70 per cent of enterprise budgets for hosting and cloud is being spent on other services.

Specifically, they include application services (42 per cent); managed services (14 per cent); security services (nine per cent) and professional services for cloud enablement (five per cent).

The research reveals that a significant portion of hosting and cloud services spending is on unmanaged or self-managed infrastructure or application services.

Nearly half (44 per cent) of infrastructure services spending and 49 per cent of application services spending is for products that are bundled with additional managed or security services.

“The markets for unmanaged IaaS and SaaS are dominated by large, hyper-scale vendors,” 451 Research analyst, Liam Eagle, added.

“However, this spending trend indicates there is an appetite for the type of bundled services a broader market of managed service providers are well positioned to deliver.

“A strong opportunity exists for service providers offering a diversified set of hosting and cloud services that includes infrastructure and application hosting, as well as managed services and security services delivered around them.”

In addition, the survey indicates that enterprises use hosting and cloud services supplied by a broad range of provider types.

Public cloud infrastructure providers, which are used by 69 per cent of businesses, are the most common, followed by managed hosting providers, used by 26 per cent of enterprises.

According to Eagle, IaaS and SaaS usage is strong and these markets are dominated by small numbers of established leaders.

“The market for managed infrastructure and application services is a longer tail market, with greater opportunities for providers who emphasise expertise in operating, optimising and securing the infrastructure and application products they deliver,” he said.

“This includes opportunities to deliver services based on reselling infrastructure and application services from the largest IaaS and SaaS vendors.”