Cloud computing is 10 per cent of external IT spend

Companies spend around 10.2 percent of their budget for external IT services on cloud computing, according to a new Gartner survey.

The survey of CIOs across 40 countries, from April to July 2010, found that 39 percent of respondents allocated IT budget to cloud computing. Gartner surveyed 1,587 CIOs and other senior IT decision makers about general IT spending trends, with 484 respondents providing answers relating to questions on cloud computing.

Gartner asked how organizations’ budgets for cloud computing were distributed.

“One-third of the spending on cloud computing is a continuation from the previous budget year, a further third is incremental spending that is new to the budget, and 14 percent is spending that was diverted from a different budget category in the previous year,” said Bob Igou, research director at Gartner.

On a regional basis, organizations in Europe, Asia/Pacific, the Middle East and Africa and North America spent between 40 and 50 percent of their cloud budget on cloud services from external providers.

Meanwhile, the survey found that 46 percent of respondents with a cloud computing budget planned to increase the use of cloud services from external providers.

Gartner analysts said that this demonstrated a “shift towards the ‘utility’ approach for non-core services, and increased investment in core functionality, often closely aligned with competitive differentiation.”

In addition some 43 percent of respondents expected an increase in spending for private cloud implementations designed for internal or restricted use of the enterprise compared to 32 percent looking at public cloud implementations.

Gartner described the investment trends for cloud computing as “healthy” overall.

“This is yet another trend that indicates a shift in spending from traditional IT assets such as the datacenter assets and a move towards assets that are accessed in the cloud.

“It is bad news for technology providers and IT service firms that are not investing and gearing up to deliver these new [cloud] services seeing an increased demand by buyers,” said Igou.

Rob Lovell, CEO of cloud provider ThinkGrid said: “Gartner’s survey supports what we are seeing on the ground. Companies are asking themselves why they should continue with the status quo, making up-front capital expenditure investments and carrying all the risks associated with large scale IT implementations. Cloud services allow them to eliminate these risks and upfront investment.”

Nathan Marke, CTO of service company 2e2 said, “Organizations realize that by using external providers and cloud computing models they can gain more flexibility in their cost and skills base, while also getting the elasticity and scalability needed for growth, at less cost and with greater flexibility than traditional IT models.”

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Jim Love, Chief Content Officer, IT World Canada

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