Key IT Segments Continue Their Shift to the Cloud

[fa icon="calendar"] Sep 26, 2018 2:42:57 PM / by Tristan Penver

IT spending on cloud products is continuing unabated.


According to Gartner, 28% of spending within key enterprise IT markets will shift to the cloud by 2022.

It will come as a surprise to no-one that growth in enterprise IT spending on cloud-based offerings is outstripping growth in traditional, non-cloud IT offerings, a fact which Gartner expands upon in their press release titled Gartner Says 28 Percent of Spending in Key IT Segments Will Shift to the Cloud by 2022.

“The shift of enterprise IT spending to new, cloud-based alternatives is relentless, although it’s occurring over the course of many years due to the nature of traditional enterprise IT,” said Michael Warrilow, research vice president at Gartner. “Cloud shift highlights the appeal of greater flexibility and agility, which is perceived as a benefit of on-demand capacity and pay-as-you-go pricing in cloud.”


"The shift of enterprise IT spending to new, cloud-based alternatives is relentless."

The shift to cloud is part of the shift within business towards digitalization, and digitalization is a great enabler. It allows for operational efficiencies beyond traditional processes, and due to its instant nature, aids business transparency as well. Digital systems are now commonplace throughout modern business - many companies run ERP systems which automate and integrate their core business processes such as taking customer orders, scheduling operations, and keeping inventory records and financial data.

Gartner identifies four cloud shift categories: system infrastructure, infrastructure software, application software and business process outsourcing, and says the largest cloud shift prior to 2018 occurred in application software, particularly driven by customer relationship management (CRM).

 

A Gartner table showing cloud shift proportion by category.

According to Gartner, CRM has already reached a tipping point where a higher proportion of spend occurs in cloud than in traditional software. The research organization states that this trend will continue and expand to cover additional application software segments, including office suites, content services and collaboration services, through to the end of 2022. 


Whilst application software systems such as CRM are already familiar to the IT distribution channel, what is less familiar are customer data and channel distribution platforms which are receiving increasing attention for their ability to aggregate customer data for analysis and insights-generation.



Customer data and channel distribution platforms are receiving increasing attention for their ability to aggregate customer data for analysis and insights-generation.

Customer data platforms are broader than CRM systems, and aggregate their customer data from a wider set of sources than traditional internal CRM systems. Channel distribution platforms are similar in that the transactional data from all channel sources is aggregated within the platform. Because all business transactions are driven through the aggregation platform, channel businesses utilizing such platforms have access to large amounts of potentially useful data which can be organized and utilized when making strategic business decisions. 

 
In fact, the ChannelCenter platform accommodates the various types of software application products driving this shift to cloud whilst simultaneously being one of those high-growth cloud-based products itself. The fact that it supports software products and programmes which are on a growth trajectory bodes well for the profitability of those customers intending to make use of the platform over the long-term.
 

Topics: Cloud

Tristan Penver

Written by Tristan Penver

Tristan writes on the impact of increasing digitization and technological advancement on the traditional IT distribution channel.