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Cloud Infrastructure Spending Surpasses On-Premise Data Centers in 2020


Enterprises have been moving to the cloud as more increasingly rely on it other than on-premise data centres. While the trend continues to grow day by day, it is not until last year that spending on cloud infrastructure surpassed on-premise data centres — and by a large margin. This is according to a new report from Synergy Research Group.

Spending on cloud infrastructure grew by 35 per cent to reach almost $130 billion in 2020. At the same time, enterprises reduced spending on data centre hardware and software by 6 per cent to $89 billion.

The latest report indicates how enterprises are increasingly depending on cloud infrastructure, as spending has been on an uptrend since 2010. By 2019, the spending almost equalled enterprise spending on data centres, but the pandemic has helped catapult the cloud shift.

The trend in enterprise spending on cloud infrastructure and on-prem data centres/ Synergy Research

“Over the decade, average annual spending growth for data centre was just 2% and for cloud services (IaaS, PaaS and hosted private cloud) was 52%,” Synergy Research Group noted.

Platform as a service, simply PaaS, has been a major growth segment in cloud infrastructure, especially database, IoT and analytics, over the last decade, the report says.

“Over the last ten years we have seen a dramatic increase in computer capabilities, increasingly sophisticated enterprise applications and an explosion in the amount of data being generated and processed, resulting in an ever-growing need for data centre capacity,” said John Dinsdale, a Chief Analyst at Synergy Research Group.

He adds that most servers (60%) being sold are going into cloud providers’ data centres.

Dinsdale says they don’t expect to see a massive reduction in enterprise spend on data centres. But he believes cloud infrastructure spending will continue growing.

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Alvin Wanjala

Alvin Wanjala has been writing about technology for over 2 years. He writes about different topics in the consumer tech space. He loves streaming music, programming, and gaming during downtimes.

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