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In about three year, nearly 45 per cent of all severs shipped by manufacturers will be purchased by cloud providers, according to analysts at International Data Corp., predicts. This means a lot of IT departments are moving from servers to software-as-a-service.

“A lot of capacity is shifting out of enterprise into cloud service providers,” said IDC analyst, Frank Gens.

IDC the trend bring server revenues down by 3.5 per cent this year.

The adoption of virtualization to increase server capacity is also another reason behind the market shift. Data centre consolidation as well the increasing uptake in denser servers able to handle larger workloads, are cutting down the number of servers.

IT managers will still be controlling physical servers but that market will increasingly decline, according to IDC. The analyst firm said anywhere from 25 per cent to 30 per cent of servers shipped this year will go to cloud service providers.

In-house servers, will no longer be the default, said Mark Endry, CIO for the United States operations of Arcadis, a global consulting and design engineering firm. In 2011, the company still ran IT in-house but is moving those operations to SaaS.

For example, Arcadis now uses Workday, a SaaS-based HR management system to replace its in-house ADP HR system.

Arcadis is also planning to stop running its in-house Exchange and SharePoint servers and move to Microsoft’s Office 365.

Users purchasing servers are now looking for converged or integrated systems that put together server, storage, networking and software functions, said Gens. These buyers account for 10 per cent of the market and are expected to account for 20 per cent of the market by 2020.

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