How is the demand for cloud damaging on-premises tech?

As cloud technology becomes more prevalent in the enterprise, how are other technologies faring?

How is the demand for cloud damaging on-premise tech?

New data from Synergy Research Group indicates that the $250 billion cloud market ecosystem is growing at 32% annually. However, the demand for enterprise cloud could actually be detrimental to non-cloud technologies.

The cloud in 2018

Last year, operator and vendor revenues surpassed $250 billion across seven key cloud services and infrastructure market segments. IaaS and PaaS services grew the most at an impressive rate of 50%, while hybrid cloud management software grew by 41%.

SaaS and public cloud infrastructure also rose at a rate of 30% and hosted private cloud infrastructure services at 29%. Although cloud infrastructure benefitted from a strong growth rate in 2018, the aggregate spending on cloud service markets is growing even more rapidly.

In 2016, spending on cloud services overtook spending on hardware and software used to build public and private clouds. However, the research indicates that 2017 and 2018 widened this gap dramatically.

Cloud begins to dominate

John Dinsdale, a Chief Analyst and Research Director at Synergy said that 2017 was the year when “cloud became the new normal.” In 2018, however, cloud began to “dominate IT spending in some areas.”

As a result, this essentially drained “potential growth opportunities for non-cloud technologies and services,” Dinsdale added. Today, cloud technologies are generating huge revenues for both cloud service providers and tech vendors.

Although growth rates will inevitably diminish, Dinsdale expects the market to double in size in under four years. Despite this positive growth, the popularity of cloud could potentially erode enterprise investment in non-cloud technologies.

For example, switches and routers experienced a minor growth rate of 3% last year. Moreover, network security and WLAN spending only increased moderately from the previous year.

Investment in cloud continues

Earlier this month, Hadoop big data giants Cloudera and Hortonworks finalised their all-stock merger announced in October. As a result, this will “create the world’s leading next generation data platform provider, spanning multi-cloud, on-premises and the Edge.”

Furthermore, Deloitte Global has revealed that among those companies that obtain artificial intelligence in 2019, 70% will do so through cloud-based enterprise software. The report also predicts that 65% of enterprises will create AI applications using cloud-based development services.

Finally, Forrester predicts that cloud spending will “spike” in 2019 as enterprises adopt cloud tools and services. This is reportedly due to the increased modernisation of core business applications in large enterprises.

Do we need to reevaluate the way we look at data and the cloud? Listen to our podcast with experts from Cloudera and Deutsche Telekom to find out