Cloud computing spending: Miniscule, but fast growing

Cloud computing spending: Miniscule, but fast growing

Summary: Enterprise spending on cloud is still a tiny fraction of overall tech spending. But it will grow fast over the next few years, according to a new report


Despite the hype, cloud computing is still a tiny proportion of overall IT spending, although it is likely to grow fast.

According to analysts TechMarketView, the UK market for cloud computing reached £1.2bn in 2011, 38 percent higher than the previous year. The analysts expect cloud-computing revenues to grow by 35 percent each year to reach £3.9bn by 2015.

Enterprise spending on cloud computing in the UK is still small, a report has found.
That sounds like a lot of money, until you realise this means that cloud accounted for a mere two percent of the UK software and IT services market in 2011. Rapid growth will see cloud build to nine percent of the market in 2015, however.

In its report, UK Software and IT Services Market Trends & Forecast 2012, the analyst house defines the cloud-computing market as composed of software, infrastructure and platform-as-a-service (PaaS), as well as application provisioning and business process-as-a-service. This definition does not include cloud consulting, or building and integrating IT and network infrastructures capable of delivering cloud computing.

Indeed, as the analyst house notes, "the term 'cloud computing' has become pervasive — indeed overused — as a service description". It said most of what is portrayed as cloud computing is still just outsourcing and hosting.

The vast majority of cloud computing revenues derive from SaaS — 72 percent in 2011, according to TechMarketView. However, it said this will decline to around 60 percent by 2015, as the volume of 'true' cloud-computing services increases from IT services suppliers.

Rough ride

According to the analysts, tech vendors will be in for a rough ride over the next few years, as the tough economic climate conspires with cloud computing, BYOD and off-shoring to drive down tech spending.

TechMarketView believes the UK IT market will continue to decline in real terms at least until 2015, at which point it would take just two more years of decline to mark a decade of recession. It warned that if the UK economy does not rebound towards three-percent growth in the next three years, the UK could "easily see" more years of decline in the software and IT services market.

"Even if technology trends and customer sentiment only add 10 percent 'headwind' each year to pricing, it's hard to see demand levels increasing by the 12 percent (including inflation) necessary to drive growth in real terms. As such, perhaps the UK [software and IT services] market is doomed to remain in recession — full stop," the analysts warn.

According to the report, there is a big difference between the public and private sectors when it comes to spending on IT. Public-sector spending cuts took more than £900m out of the market in 2010/11, and a further £350m will be cut in 2012. The public-sector share of UK IT spending will drop from 29 percent in 2010 (£11.8bn) to 27 percent in 2015 (£11.8bn).

In contrast, private-sector IT spending in 2011 grew by 3.2 percent to reach £29.7bn, which the analysts expect to grow by a further 3.4 percent this year. TechMarketView expects the UK private-sector IT market will be worth £31.8bn in 2015.

Topics: Cloud, Enterprise Software, Tech Industry

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  • SP

    Miniscule? So such word.
    Frida Yad
    • Sure there is

      They're little scules, for little kids.
      Robert Hahn
  • cloud

    if the companys told the people that used the cloud how unsafe it was they would lose a lot of people because that is not safe i am not going to use google or gmail yes i read the info on google page what a line they can not keep us safe at all the best way is to backup you info your self not on line crap if you do back it up online kiis it good by for good you see i know what i have gone though and not one time can a tec help at all they just say will you will have to reformat your computer so i leaned how to tec my own computers microsoft tec did not help me google tecs did not help me so there is no help from they at all
  • Too Much

    Any spending on the cloud is too much. The issues with using the cloud have been enumerated in many comments here: security, reliability, cost, etc. Those who depend upon the cloud will have troubles -- sooner or later.

    It is the services and software companies who are pushing the cloud so they will be more in control, reducing our computers to the status of dumb terminals. They do not care about all the problems we might encounter using a third party to store and process our data. All they care about is getting our money.

    Side issue: What is with this new voting system??? You can only vote FOR a comment, not against it. Isn't the terribly biased? Might as well have no voting at all compared to this one-sided system. The system should allow positive and negative votes and display the total of both to give those reading here a correct view of other reader's feeling. Just telling me that three people voted for a comment does not reflect reality at all. Maybe thirty people would have voted negative, but that is not allowed.
  • Another way to look at it

    Could it be that cloud computing is actually living up to its claim of actually LOWERING IT costs ?

    If so, IT spending will be lower even with its adoption, correct ?

    I guess decades of vendors pushing products with claims of lowering costs but actually sending IT costs through the roof has set a trend in reporting.
  • Digesting Cloud

    Cloud is not for everyone, in every instance at every time, but then no solution ever has been. What it does do through is bring more flexible and greater computing power to the masses at affordable prices and in a manner that is easy to digest. Cloud in its varying forms will continue to grow as an ever increasing number of existing applications are offered in a variety of form factors and new innovative solutions come to market.

    Don't ignore cloud purely because of what it is, weigh up the pro's and con's and ni any business requirement or refresh give it a fair hearing before making a selection of form factor to utilise.

    Ian Moyse