As discussed in our previous blog, cloud-based solutions are a disruptive force, poised to drive substantial sales in many different areas within the IT landscape. But are companies moving toward using the private cloud or the public cloud? RainKing asked over 350+ IT decision makers about their current cloud budget and how they expect it to change in the next 6-12 months. One thing is clear: cloud usage will increase across all industry sectors in the next 6-12 months.
Public vs. Private
Cloud products are primarily split between two specific areas: private cloud and public cloud. Private cloud deployments are single-occupant environments where the hardware and network are under a single company. Public cloud deployments are multi-occupant environments where the hardware and network are shared by multiple companies. The spend differentiation between these two types is significant for a host of reasons, such as: are industries more concerned with security (private cloud preferred) or with web server and consumer-based systems (public cloud preferred).
With multiple cloud combinations and solutions available, RainKing Research investigated budget allocation for 2017 and found a surge in all eight major industries as evidenced by the graphs above. Technology and Energy & Utilities sectors both plan to spend over 25% of their budgets on public cloud services. This is a particularly high jump for the Energy & Utilities industry whose current allocation for public cloud is a little above 10%. The Financial sector on the other hand is heavily increasing spending in the private cloud, most certainly for security reasons.
Overall, more industries are looking to increase private cloud spending in 2017. Notably, consumer goods will allocate an additional 9% of budget dollars to private cloud, the greatest increase across all sectors, in the next 6-12 months. Meanwhile, Energy & Utilities will up its public cloud usage by another 12%, the most of any sector, in public or private cloud services.
Most companies are now using a combination of private and public cloud solutions. But what applications are best suited for either type? In general, applications that exist in a private cloud contain data with strict regulations and compliance standards. Private cloud also provides increased visibility and accessibility to the existing data. These factors lead to companies placing mission critical applications on private cloud environments and using public cloud solutions to support non-mission critical applications. Some examples of non-mission critical applications include development and testing applications, web portals, and expense and time reporting solutions. Since public cloud solutions are a lower cost option, it makes sense that companies are choosing hybrid environments, when it’s not necessary to house all applications and data on a more expensive private cloud.
Does Revenue Determine the Vendor?
Let’s take a look at how the major cloud vendors vary based on revenue bands in the marketplace. We dug into cloud vendor usage between Q1-Q3 of 2016 and found some interesting results.
In companies with revenue of less than $1 billion, the most preferred private cloud vendor was Amazon Web Services (AWS) with 30% of the respondents. Microsoft Azure had the 2nd highest with 21% of the respondents. The most compelling stat is that 34% of the companies with under $1 billion in revenue do not use cloud-based storage.
In companies with revenue of $1-$10 billion, the findings are similar to the smaller revenue band. The most preferred cloud vendor was Amazon Web Services at 29% on average and Microsoft Azure isn’t too far behind with 22%. Moreover, one-third of the respondents noted that their company currently does not have a cloud-based storage solution.
The most preferred cloud storage vendor in companies with revenue over $10 billion is Microsoft Azure with an average usage of 25%. Here, Amazon Web Services comes in second with 20%. Like the other two revenue bands, even the supersized companies also have a high percentage of participants (31%) who responded that their company does not have a cloud-based storage solution.
A Wide-Open Market
Across all revenue bands nearly one-third of the respondents indicated that their company does not currently have a cloud based solution. That is a wide open market. Why the lengthy wait to adopt? Our research suggests it is mostly due to security concerns. Other factors include overall uptime issues and the difficulty of migration due to a company’s legacy infrastructure. In other words: time and money.
However, Cloud solution vendors who address security worries, and alleviate concerns regarding the amount of time and money it will take to implement, will have numerous opportunities for a strong play in 2017.
For more information about our research or how RainKing can help cloud solution vendors in 2017, contact us today!
Data analyzed by Dorie Phillips and Jake Forman, content written by the Analytics Team