Enterprise spend on cloud infrastructure reaches $130bn in 2020

Enterprise spend on cloud infrastructure reaches $130bn in 2020

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Enterprise spending on cloud infrastructure services continued to increase in 2020, growing by 35% to reach almost $130 billion, according to new data from Synergy Research Group.

Meanwhile, the data found that enterprise spending on data centre hardware and software dropped by 6% to under $90 billion.

This continued a decade-long trend of growth in cloud and virtual stagnation in the market for enterprise-owned data centre equipment.

In 2019, the two markets were almost equal in size but in 2020 COVID-19 helped to further fuel the shift in worldwide IT operations.

Over the decade, average annual spending growth for data centre was 2% and for cloud services (IaaS, PaaS and hosted private cloud) was 52%.

In 2020 worldwide spending on enterprise data centre hardware and software (comprising servers, storage, networking, security and associated software) was $89 billion.

Synergy said server share of the total data centre market remained steady while storage share declined. Within the $130 billion cloud infrastructure services market, the major segments with the highest growth rates over the decade were mainly within PaaS – especially database, IoT and analytics.

“Over the last ten years we have seen a dramatic increase in computer capabilities, increasingly sophisticated enterprise applications and an explosion in the amount of data being generated and processed, resulting in an ever-growing need for data centre capacity,” said John Dinsdale, a Chief Analyst at Synergy Research Group.

“However, 60% of the servers now being sold are going into cloud providers’ data centres and not those of enterprises.

“When a company needs computing power to manage its data and to run its business apps, it can either invest in its own data centre infrastructure or it can use cloud services provided by a public cloud provider.

“Clearly companies have been voting with their wallets on what makes the most sense for them. We do not expect to see such a drastic reduction in spending on enterprise data centres over the next five years, but for sure we will continue to see aggressive cloud growth over that period.”

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