And some data around IT spend.
Data center spending is surging as enterprises adopt AI and cloud providers expand capacity, with capital expenditures on cloud infrastructure increasing by 38% year-over-year in the first half of 2024. Infrastructure investments are expected to exceed $400 billion this year, driven by demand for AI-optimized servers. The balance between data centers and cloud services is shifting, with data center spending growing 30% year-over-year, outpacing cloud services revenue growth. Major hyperscalers like AWS, Microsoft, and Google are heavily investing in infrastructure to support AI workloads, contributing to a significant increase in compute capacity and future data center projects.
Over in the Information Age, I spotted two data points. A recent study by Citrix suggests 25 per cent of UK organisations – and 42 per cent of US firms – are either considering moving or have already migrated at least half of their cloud-based workloads out of a hyperscale public cloud platform back to on-premises infrastructures. Another report by Flexera finds that 89 per cent of companies are now following a multi-cloud strategy, making use of public and private clouds, or a hybrid of the two.
Research by Agilitas reveals that IT channel leaders are optimistic about forming collaborative partnerships as the industry shifts towards a service-based model. Key priorities include enhancing customer experience, with 85% of businesses prioritizing this, and focusing on sustainability. The report indicates a strong confidence in balancing social issues with profit, particularly among managed service providers and value-added resellers.
A survey from Rocket Software and Forrester Consulting found IT leaders are wary of the potential risks of IT overhaul programs, with one-third believing they are highly disruptive to operations. Common roadblocks encountered during modernization projects often lead to reduced productivity, but there are broader considerations at play, the study found.
Some of the most common hurdles faced by IT leaders include costly and time-consuming application rewrite projects. Just over half (51%) of respondents admitted to having attempted at least six rewrite projects as part of a cloud migration strategy.
Why do we care?
With capital expenditures on cloud infrastructure increasing by 38%, and data center spending growing faster than cloud service revenue, IT service providers can benefit by focusing on infrastructure solutions, whether in data centers or cloud architectures. This is especially critical as companies look to balance between on-prem and cloud solutions.
IT providers should step in as strategic partners, offering modernization services that focus on minimizing disruption and providing clear paths to ROI. Incremental cloud migration, hybrid strategies, and reducing the need for costly application rewrites will be important selling points.