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Cloud spending – growing, or softening?

Bit more data on cloud spending — Gartner released data on Tuesday indicating that spending on public cloud services will grow 20.7% in 2023.     Gartner expects organizations to spend $490.3 billion on cloud services this year, an 18.8% increase from the $412.6 billion invested during 2021. The fact that the market’s growth rate is projected to accelerate from 18.8% this year to 20.7% in 2023 reflects increasing enterprise demand across several cloud service categories. 

Gartner’s forecast organizes the cloud service market into six significant segments. The infrastructure-as-a-service category is expected to grow at the fastest rate in 2023. Gartner estimates that IaaS spending will increase by at least 29.8% next year to $150.2 billion.  

This after last week’s earnings calls from the top three providers, Google, Amazon, and Microsoft, warning of slow down in the space.  

A bit of contrast – Node4, a cloud-based managed services provider, did their research, highlighting a “softening” in the desire to adopt public cloud across all workloads.    Their statement – the public cloud remains “the destination” for most organizations and workloads but that it’s tempered, and sometimes reversed, over costs.

Why do we care?

One might think there’s a conflict here, right?   How can it be a fast-growing area yet also be softening and sometimes reversing?   The answer is a lot more straightforward than you might guess.

Costs.    More importantly, value.   If a workload is deployed in a manner where the costs outweigh the value of the spend, it’s in the wrong place.    The often-fulfilled promise of the cloud is that it reduces costs.  What it really does is maximize the investment.   If that calculation is either incorrect or improperly communicated, the customer will be unhappy with the selection.

The cloud is clearly the direction for most workloads – and it’s up to providers to get the calculus right.  

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