Cloud Migration’s Effect on IT Budgets
Cloud Migration’s Effect on IT Budgets by UCStrategies Staff
One of the questions on everyone’s mind in the IT industry at the moment is how migration to the cloud will affect IT budgets. According to Gartner’s analysis, if the early indications are anything to go by it seems that shifting to the cloud will reduce IT spending in some areas but will create an increase in expenditure on new types of IT services.
Bryan Britz, research director at Gartner, explained that the cloud’s effect on IT spending is complex and while it is creating savings in some areas, it is simultaneously creating new needs for IT services. If a business shifts a number of workload to the cloud it will cut costs on data center outsourcing. However, this may lead to more spending on hosting strategies. “In a lot of cases it actually kicks off new growth,” Britz added.
The cloud also has mixed effects on application outsourcing. According to Gartner, although the move to software as a service (SaaS) will decrease the need for application outsourcing, SaaS will also cause an increase in the need for implementation services.
“SaaS is still an implementation project for companies: they still, in most cases configure it – which is the new word for customize. What we've seen in SaaS implementations is there is still a fair amount – admittedly less than if they were doing a big package implementation – but still a fair amount of professional services associated with adopting a SaaS platform,” said Britz.
Gartner explained that the transition to SaaS will also push more revenue to the application outsourcing sector due to more businesses opting for cloud options for applications that they would otherwise have developed themselves.
Cloud’s ultimate impact on IT budgets will depend on the size of the enterprise. Large companies are more likely to relocate some of their IT budget from traditional IT services to public cloud services. New spending opportunities are being created in the SME sector as more and more small and midsize businesses are adopting public cloud services.
Britz pointed out that although migrating to the cloud can result in increased spending on IT services rather than cutting expenditure, it does not detract from the benefits of moving into the cloud.
“The argument should really be about agility more than it is about cost. It's more about speed and agility and frankly that needs to be the tipping-point discussion,” he added. (CU) Link