The cloud transition has arrived

Posted by Ron Miller on Apr 20, 2015 12:00:00 PM

Ladder to CloudWhile many companies have begun the journey to the cloud, they are often living in parallel universes. In one, they maintain older legacy systems. In the other, they have moved workloads to cloud. That means they have to figure out how to manage both worlds.

We know by now that we are living in a transitional hybrid world. Over time that could change, but for the short term, many companies have big investments in large, expensive legacy systems and can't afford to simply rip and replace.

They must carefully maintain these legacy systems, and ever so slowly over time as some of these systems become impossible to manage, companies will modernize and move them to new systems, possibly in the cloud. For now, however, it requires managing two different approaches.

Split Personality

As The Economist reported this week, the way companies are dealing with these parallel worlds is by splitting their IT staffs with one working on the old legacy systems and the other working on the new stuff in the cloud. The argument is that because it requires a different set of skills, it requires two sets of personnel.

Just how far along are we in this transition? If you believe a survey conducted in March by 451 Research on behalf of Microsoft, the majority of IT budgets have already shifted to the cloud. The survey reached over 1,700 IT professionals in 10 countries (although 53 percent of responses came from the United States).

In a surprisingly consistent set of results across regions, the survey found that somewhere between 40 and 44 percent of IT budgets are for maintaining on-premises infrastructure and staff. The rest is split among what they called "hosting services, SaaS, and other off-premises services."

451_Research_IT Budget Chart

If you're like me, what jumps out at you is that the majority of these budgets are already off-premises, which I presume means cloud-based services. That's an amazing result if it's accurate.

Challenges ahead

The survey went on to ask participants how they would project their IT budgets two years from now, and it found budget allocations change—but only by a few percentage points.  

It's worth keeping in mind that all signs point to a cloud market that's still growing dramatically. In fact, The Economist article cites Gartner, which predicts the cloud market will grow from $176 billion this year to $240 billion in 2017, just two short years away.

What's more interesting, the $176 billion number, according to The Economist represents just 4 percent of the worldwide IT budget.

That suggests there is plenty of room for growth here and we will continue to see companies transition over time. It also suggests the survey might be optimistic in terms of current cloud transition usage. Regardless, the transition for companies moving to the cloud while dealing with legacy systems is real, and that will be a real challenge moving forward.

Photo Credit: FutUndBeidl on Flickr. Used under CC by 2.0 license.

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Topics: Cloud Industry and Technology

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