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IT Budgets Will Gravitate to Cloud Efforts Featured

IT Budgets Will Gravitate to Cloud Efforts "Notebook work with statistics on sofa business"

The economic downturns caused by the coronavirus pandemic have affected many industries, and some of them might take months or even years before they can recover. This means the budgets will have to be cut going forward as companies re-strategize. While other industries have it rough, cloud infrastructure projects, collaboration tools, and communications equipment are going the opposite direction. According to Forbes, the average cloud spending has gone up 59% from 2018 to over $73 million in 2020. With the shifting workplace preferences, companies that had not made digital transformation a priority will face a hard time. They will be in a difficult position than those who have embraced technology.

As cloud technologies continue being embedded in enterprise and business strategies, growth is expected to increase even more. According to a survey by the International Data Group (IDG), 81% of organizations have at least one application or part of their computing infrastructure in the cloud. The same survey notes that 13% of companies with over 1000 employees have migrated their IT environment to the cloud today, while 22% of all the companies surveyed will be running on cloud infrastructure and applications fully. On the other hand, 12% of enterprises plan to adopt cloud-based applications and computing infrastructure within the next year.

From the survey above, stakeholders in the IT sector see a potential in the cloud, and there will be an increase in funding in cloud computing in the coming years. The areas that are likely to benefit the most include cybersecurity, specifically areas such as identity management, network connectivity, and cloud security platforms and tools. Big data analytics is another area that has shown immense potential. Going forward, cloud companies will invest more to enable this technology to react to unexpected opportunities and changes in the market place. Companies will invest in infrastructure that is scalable and has the potential to meet the spiking demand while reducing onsite staff.

With the rise in demand for cloud applications, enterprises with more than a thousand employees are investing an average of $158 million on cloud infrastructure and applications in 2020 alone. This will address the growing need for cloud dominance by companies. The budgets of companies will also gravitate towards new monitoring tools such as artificial intelligence, network diagnostics tools, and cloud-native observability. These tools will minimize digital outages, increase efficiency, reduce manual operations, and eradicate organizational silos.

As companies migrate to the cloud, enterprise software will be the leading area that companies seek to move to the cloud.  The software that will be moved includes Customer Relationship Management (CRM), Human Resource Management (HRM) software, and Enterprise Resource Planning (ERP), among other applications, all of which will be moved by 2021. The IDG survey indicated that up to 16% of companies plan to move their collaboration and communication solutions to the cloud as early as next year. This was accelerated by the work-from-home and social distancing health considerations that were occasioned by the coronavirus pandemic. With the pandemic expected to be here with us for an unknown time, collaboration tools will remain the top area of investment for many companies for an unforeseeable future. Other areas that will be moved to the cloud are Business Intelligence (BI) and Data Warehousing and Analytics systems.

Although digital transformation budgets are likely to go up due to the changes in the work environment, IT leaders will be forced to cut costs from other places. Digital transformation is making companies more flexible and agile, which is what is needed under current conditions.  As companies find ways to tackle the existing challenge, they should prepare for anything if the current pandemic gets worse or be in a position to respond well if a new one emerges.

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Scott Koegler

Scott Koegler is Executive Editor for PMG360. He is a technology writer and editor with 20+ years experience delivering high value content to readers and publishers. 

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