In the 2020 State of Tech Spend Survey, conducted by Flexera, hundreds of IT managers at large companies with more than 2,000 employees were asked how they allocated their investments in IT and technology. Their responses reveal that various types of cloud solutions are rapidly taking an increasingly larger share of the pie.
Today, a quarter of IT investments are now going to cloud solutions, with the largest investments being made in public cloud services (IaaS/PaaS) and SaaS solutions. This means that cloud investments now exceed total spending on various types of on-premise solutions (local physical instances of hardware/software). Almost a quarter of companies' total software expenditure is now spent on SaaS (Software-as-a-Service), while the remainder is still invested in ‘traditional’ software.
More work processes are being moved to cloud solutions
This shift in spending will undoubtedly continue in 2020. More than 80 per cent of respondents say they expect to increase their investments in both IaaS/PaaS and SaaS – and 40 per cent expect significant increases in IaaS/PaaS investments. Growth will be driven by the increasing migration of business processes to the cloud – the IT managers surveyed state that 32 per cent of their business processes are currently running in the cloud (SaaS, IaaS and PaaS), but that this figure will increase to 43 per cent as early as next year.
The increased use of cloud solutions will be financed by reduced investments in on-premise software and proprietary data centre solutions. More than half of respondents plan to reduce their investments in traditional software, while 65 per cent plan to reduce their investments in proprietary data centre solutions in 2020.
The challenge of controlling IT expenditure
The survey also shows that organisations still see managing both their cloud costs and their total IT expenditure as a major challenge, and that work is therefore needed to optimise expenditure on their growing – and increasingly cloud-focused – IT portfolios. Organisations are already struggling to create visibility and control over their IT expenditure. Less than a quarter believe that their organisation is currently ‘very mature’ in terms of cost optimisation of traditional software licence expenditure, while less than 15 per cent consider themselves mature in managing and optimising expenditure on public cloud services and SaaS.
According to respondents, the main challenge is to create reports on expenses linked to delivered IT services (86 per cent of respondents also point out that the number of manual processes in expense management is a major challenge). This area is also particularly critical because companies must try to assess the cost implications of migrating IT services to the cloud in order to measure the return on their digital transformation efforts.
