Amid cloud spending boom, Microsoft Azure, AWS gain IT spend

The COVID-19 pandemic has accelerated spending on digital transformation and cloud and Microsoft and AWS are the big winners.

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The COVID-19 pandemic has accelerated spending on cloud computing, automation, artificial intelligence and machine learning and Microsoft and Amazon Web Services appear to be big winners, according to a Flexera report.

Flexera's State of Tech Spend Report found that 49% of companies expect to increase information technology spending in 2021 with another 19% maintaining current levels.

Fifty-seven percent of 474 respondents said they increased spending on software as a service due to COVID-19 and 49% upped spending on public cloud services, according to Flexera. As cloud spending surged, 36% said that they cut on-premises software.

Overall, cloud spending represented 30% of total IT budgets up from 25% in 2020.

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As the COVID-19 pandemic accelerated digital transformation and cloud efforts, Microsoft and AWS appeared to take wallet share. Consider:

  • 61% of respondents said they would increase spending on Microsoft Azure in 2021;
  • 57% planned to spend more on Microsoft SaaS offerings;
  • 54% planned to increase spending on AWS;
  • 46% said they would spend more on Microsoft licensed software;
  • Those gains appear to come at the expense of Oracle licensed software as 25% of respondents said they would cut spending;
  • And 23% said they would cut spending on IBM licensed software.

Overall, cloud spending passes on-premises infrastructure. For instance, 27% of respondents said they will "reduce significantly" the number of data centers in 2021 with 7% eliminating them completely.

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Spending on automation also shifted as 73% said they will increase spending on automation and 64% said they would spend more on AI and machine learning, according to Flexera.

Other key findings:

  • Top initiatives for 2021 were the same as 2020: Digital transformation, cybersecurity and cloud.
  • Cost savings was cited as the biggest initiative by 27% of respondents, up from 9% in 2020.
  • Enterprises are allocating 64% of IT spend to running the business with 36% to growth and innovation.
  • IT spending averages 7.5% of revenue.
  • Nearly half of IT staff members work from home.
  • 79% of organizations expect to increase investments in remote workers in 2021.