The pandemic ushers in the next era of enterprise cloud adoption

The broad industry shift to the cloud was well underway by the time COVID-19 started to spread around the globe in March 2020, but there is clear evidence that cloud adoption has accelerated at a previously unforeseen pace as a result of the pandemic.

Data from Synergy Research—which diligently tracks global cloud spend and market share—showed enterprise spending on cloud infrastructure services (IaaS, PaaS, SaaS, and hosted private cloud services) reached $65 billion in the third quarter of 2020, up 28% from the third quarter of 2019 and up 3% from what analysts expected before the pandemic hit, adding around $1.5 billion of spending for that quarter alone.

“It is quite clear that the Q3 market was out of sync with the trends and substantially larger than would have normally been expected,” said John Dinsdale, chief analyst and research director at Synergy Research. “Logically the effects of the pandemic are the only reasonable explanation for that boost in the market.”

Spiceworks Ziff Davis, a business-to-business tech marketplace, polled 1,073 IT buyers in North America and Europe in June and July of 2020 for its 2021 State of IT report, finding that budget holders plan on aggressively shifting away from owning hardware to operating more cloud services.

It shows that hardware spending has been steadily dropping year-on-year, from 35% in 2019 to an expected 31% in 2021, with cloud spending going the other way, from 21% to an expected 24% in 2021.

The companies powering this transition also had a very good year, with cloud stocks—as represented by cloud-dominated exchange traded funds (ETFs) such as the First Trust Cloud Computing ETF (SKYY) and the Global X Cloud Computing ETF (CLOU)—far outperforming the market in 2020.

Copyright © 2021 IDG Communications, Inc.

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