MORE THAN HALF OF ENTERPRISE IT SPENDING IN KEY MARKET SEGMENTS WILL SHIFT TO THE CLOUD BY 2025

According to Gartner, Inc., enterprise IT spending on public cloud computing will surpass investment on traditional IT in various market segments in 2025. 

Only those enterprise IT categories within the markets for application software, infrastructure software, business process services, and system infrastructure are included in Gartner's "cloud shift" research. By 2025, traditional solutions will account for only 41% of IT investment in these four areas, while 51% will have moved to the public cloud. In 2025, cloud technologies will account for over two-thirds (65.9%) of application software investment, up from 57.7% in 2022.

As organisations adjusted to a new business and social dynamic during the past two years, the transition to the cloud has further intensified as a result of COVID-19. The risk of technology and service providers becoming obsolete or, at best, being relegated to low-growth areas is increasing, according to Michael Warrilow, Research Vice President at Gartner. 

Traditional products will make up 58.7% of the addressable revenue in 2022, but their growth rate will be substantially slower than that of cloud. Long-term digital transformation and modernization activities will be accelerated until 2022, which will further accelerate the migration to the cloud due to demand for integration capabilities, agile work processes, and composable architecture. Technology product managers should use the cloud shift as measure of market opportunity.

According to Gartner, the migration to the cloud will affect enterprise IT investment of more than US$ 1.3 trillion in 2022 and approximately US$ 1.8 trillion in 2025. The development of new technologies, such as distributed cloud, will amplify the ongoing disruption of the IT industry by cloud. The distinction between traditional and cloud products will increasingly become hazy. 
Enterprise adoption of distributed cloud has the potential to hasten the cloud transition since it expands the addressable market by bringing public cloud services into traditionally non-cloud domains. Due to its capacity to satisfy location-specific needs including data sovereignty, low-latency, and network bandwidth, organisations are examining it.

Gartner advises technology and service providers to actively target market segments where the move to the cloud is occurring in addition to looking for new, high-growth cloud possibilities in order to benefit from it. Infrastructure-related categories, for instance, are likely to grow more quickly than enterprise applications, a segment that has a high level of cloud penetration. With their go-to-market strategies, providers should also focus on certain personas, adoption profiles, and use cases.