Internal IT cloud spending trends towards fundamentals

Posted by Mike Vizard on Feb 6, 2015 12:00:00 PM

For all the hype surrounding cloud computing as transformational technology most usage of cloud computing by internal IT organizations can best be described as utilitarian.

For example, a new survey of 600 IT professionals by Spiceworks, a provider of IT management software, finds that only 12 percent of annual IT budgets will be spent on hosted/cloud-based projects in 2015. Of that, 18 percent will be allocated to email hosting, 16 percent to Web hosting, 13 percent for online backup/recovery, 7 percent for application hosting, and 6 percent for industry-specific apps.

14711793077_7088d420cf_zThe survey finds that the average annual IT budget is less than $300,000, so IT services firms that play in the cloud space need to find a lot of customers in order to grow their business to any appreciable level. As such, IT services firms should concentrate more on the IT fundamentals than on grand visions of how cloud computing will transform IT.

Projects allocated to the cloud

In fact, the most telling thing about the Spiceworks survey is how much IT professionals equate hosting with cloud computing, which is why the number one and two projects allocated to the cloud are email and Web hosting.

The reasons IT professionals are dragging their feet on cloud computing are twofold. Most organizations have an application running in house that for all intents and purposes is already paid for. The only time the business will want to have a serious conversation about replacing that system is when the cost of that system has been fully depreciated.

The second issue comes down to human nature. Most IT professionals are content to either simplify or eliminate a task that they find to be monotonous. That’s why backup and recovery is the third most prevalent use case for the cloud. Of course, the fact that backing up data in the same location where a disaster might strike isn't a good idea might have something to do with it. But in reality, most IT professionals don’t tend to think that broadly. To them the cloud is a place to backup and archive data without having to acquire and deploy new systems. Even then, in their minds they still need a local copy of their most recent data to make sure they can meet all their recovery time and point objectives.

Adding value to IT

None of this means there aren’t thousands of applications being deployed in the cloud. Developers have flocked to the cloud to create applications that are delivered as a service; often working around the internal IT organization to accomplish it. IT service providers need to find a way to start a conversation about how to provide complementary services to those applications.

That doesn’t necessarily mean ignoring the internal IT organization is a good idea. It just means there is a need to find an alternative way to tap into the budget that funded the cloud application development in the first place, which based on the Spiceworks survey results clearly didn’t come from the internal IT organization. More likely, those funds came from a line of business (LOB) executive that doesn’t always see eye-to-eye with the internal IT organization. The IT services challenge is really all about adding value in a way that LOB executives appreciate, but that doesn’t make the internal IT organization envious enough to want to protect both its prerogatives and territory.

Photo Credit: Dennis Skley on Flikr. Used under CC 2.0 license. 

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Topics: IT Services Trends, Cloud Trends

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