The growth in cloud spending is moving at a quicker than expected pace as a result of customers opting to replace legacy systems with hosted alternatives forcing earlier forecasts to be increased by at least 20%.
According to Forrester Research business spending on cloud services and software has now been cranked up to $72bn this year, up from $58bn in 2013, and it now expects a 20% increase on previous estimates for the size of global spending in 2020 reaching $191bn.
The growth in cloud spending appears to be chiming in with a trend among customers to start investing in technology as more confidence returns to the economy and reveals that rather than replace existing hardware with more updated equivalents this is being seen as the right moment to move to the cloud.
The Forrester report also indicated that more firms had taken the decision to use outsourced data centres rather than making investments in building their own, providing chances for the channel to provide that support.
Zahl Limbuwala, CEO of data centre specialists Romonet, said that customers had to make sure that they were investing in the cloud for the right reasons and had done a proper analysis of what the hosted option involved.
"Generally businesses view cloud services as a means to save on costs. For businesses already operating their own datacentre it may initially seem that, pound-for-pound, the cost of most cloud-based IT services is far lower than in-house. However, this does not always take into account the costs associated with under-utilising a data centre. Even if a service is moved to the cloud, running a data centre, fully utilised or not, still costs money," said Limbuwala.
There was also a warning that the competitive landscape had become much harder recently with Google and Amazon leading the way with price cuts that could make life difficult for those looking to compete against them.
"Cloud represents the commoditisation of IT services, which means shrinking margins and potentially small differences between being profitable and being history for service providers. Other cloud providers who plan to stay in the game and compete in this market need to have accurate and timely data on their delivery cost, margin and marginal cost of delivering another unit in order to ensure they’re staying competitive or even viable," said Limbuwala.