Enterprises will spend a third of their total IT budget on cloud hosting and services next year as they increase their reliance on infrastructure as a service (IaaS) and software as a service (SaaS) providers.
According to 451 Research, enterprises currently spend 28 percent of their total enterprise IT budgets on hosting and cloud services. The analyst firm predicts that next year this will rise to 34 percent as organisations increase their reliance on external sources of infrastructure, application, management and security services.
Drilling down into that cloud services spending a little further, just 31 percent goes towards infrastructure services, while the vast majority goes on other areas such as application services (42%), managed services (13.5%), security services (8.6%), and professional services for cloud projects (5%).
According to the analysts, 56 percent of spending on hosting and cloud services is on unmanaged or self-managed infrastructure or application services.
"The markets for unmanaged IaaS and SaaS are dominated by large, hyper-scale vendors. However, this spending trend indicates there is an appetite for the type of bundled services a broader market of managed service providers are well positioned to deliver," said Liam Eagle, research manager at 451 Research.
Two thirds of respondents used public cloud infrastructure providers, while just over a quarter used managed hosting providers.
IaaS and SaaS usage is strong and these markets are dominated by a small number of established leaders, but Eagle said that managed infrastructure and application services is a "longer tail market", with greater opportunities for providers with expertise in operating, optimising and securing the infrastructure and application products.
These findings were based on research conducted in August and September 2016 with more than 580 IT professionals worldwide.
Elsewhere, 451 Research has reported that 41 percent of all enterprise workloads are currently running in some type of public or private cloud, predicting that number to rise to 60 percent by mid-2018.