Garter: By 2025 half of enterprise IT spending will be for cloud

By 2025, 51% of IT spending by enterprise IT groups that can transition to cloud—application and infrastructure software, business process services, and system infrastructure—will shift to the cloud, according to Gartner. 

Accelerating levels of cloud adoption are expected as organizations respond to a new business and social dynamics, according to Michael Warrilow, research vice president at Gartner, and this is driving a faster rate of cloud shift than pre-COVID-19 forecasts predicted.

For example, by 2025, 51% of IT spending in application and infrastructure software, business process services and system infrastructure categories will have migrated from traditional solutions to the public cloud, compared to 41% in 2022. Almost two-thirds (65.9%) of spending on application software will be directed toward cloud technologies in 2025, up from 57.7% in 2022.

In addition, cloud spending was responsible for nearly all of the 11% growth within the enterprise software segment in 2022 as organizations shift to software-as-a-service (SaaS) to support continued flexibility and agility.

Enterprise adoption of distributed cloud has the potential to further accelerate cloud shift because it brings public cloud services into domains that have primarily been non-cloud, expanding the addressable market, Warrilow stated. Organizations are evaluating distributed cloud because of its ability to meet location-specific requirements, such as data sovereignty, low-latency, and network bandwidth.

Gartner says distributed cloud is the delivery of public cloud services to different physical locations, while the operation, governance, and evolution of the services remain the responsibility of the public-cloud provider.

It provides a nimble environment for organizational scenarios with low-latency, data cost-reduction needs and data-residency requirements. It also addresses the need for  cloud computing resources closer to the physical location where data and business activities happen.

The impact of distributed cloud services has been on Gartner’s top strategic technology trends list the past few years.

More than $1.3 trillion in enterprise IT spending is at stake in 2022 from the shift to cloud, growing to almost $1.8 trillion in 2025, according to Gartner. Ongoing disruption to IT markets by cloud will be amplified by the introduction of new technologies, including distributed cloud. Many will further blur the lines between traditional and cloud offerings.

By 2025, most cloud-service platforms will provide at least some distributed cloud services, Gartner says. Distributed cloud can replace private cloud and provides edge cloud and other new use cases for cloud computing. It represents the future of cloud computing, according to Gartner.

More than $1.3 trillion in enterprise IT spending is at stake in 2022 from the shift to cloud, growing to almost $1.8 trillion in 2025, according to Gartner’s predictions. Ongoing disruption to IT markets by cloud will be amplified by the introduction of new technologies, including distributed cloud. Many will further blur the lines between traditional and cloud offerings.

Other developing cloud technologies include the increased use of Cloud-Native Platforms, Gartner stated.  The notion of lifting and shifting legacy applications to cloud environments doesn’t really play well in the real world, Gartner said. Rather, a cloud native architecture rebuilds applications to produce highly automated cloud services that deliver digital capabilities everywhere and anywhere.

Cloud-native platforms use the core capabilities of cloud computing to provide scalable and elastic IT-related capabilities as a service to technology creators. For this reason, Gartner predicts that cloud-native platforms will serve as the foundation for more than 95% of new digital initiatives by 2025, up from less than 40% in 2021.