Gartner says by 2020, a corporate "no-cloud" policy will be as rare as a "no-internet" policy is today

STAMFORD, Conn., June 22, 2016

Hybrid Will Be the Most Common Use of the Cloud

By 2020, a corporate "no-cloud" policy will be as rare as a "no-internet" policy is today, according to Gartner, Inc. Cloud-first, and even cloud-only, is replacing the defensive no-cloud stance that dominated many large providers in recent years. Today, most provider technology innovation is cloud-centric, with the stated intent of retrofitting the technology to on-premises.

"Aside from the fact that many organizations with a no-cloud policy actually have some under-the-radar or unavoidable cloud usage, we believe that this position will become increasingly untenable," said Jeffrey Mann, research vice president at Gartner. "Cloud will increasingly be the default option for software deployment. The same is true for custom software, which increasingly is designed for some variation of public or private cloud."

This does not mean that everything will be cloud-based, and concern will remain valid in some cases. However, the extreme of having nothing cloud-based will largely disappear. Hybrid will be the most common usage of the cloud — but this will require public cloud to be part of the overall strategy. Technology providers will increasingly be able to assume that their customers will be able to consume cloud capabilities.

Gartner made a number of further predictions, including:

By 2019, more than 30 percent of the 100 largest vendors' new software investments will have shifted from cloud-first to cloud-only.

The now well-established stance of cloud-first in software design and planning is gradually being augmented or replaced by cloud-only. This also applies to private and hybrid cloud scenarios.

"More leading-edge IT capabilities will be available only in the cloud, forcing reluctant organizations closer to cloud adoption. While some applications and data will remain locked in older technologies, more new solutions will be cloud-based, thus further increasing demand for integration infrastructure," said Yefim V. Natis, vice president and Gartner Fellow. "Rigid organizations cannot produce agile IT solutions. As delivery shifts more to the cloud, most IT organizations will have to reorganize to reflect the business realities of cloud computing: continuous innovation and change, pervasive integration, competing with cloud providers for some initiatives, and crucial prevalence of influence over control in IT's relationship with lines of business. While historically the greatest competitor to external service providers has been internal IT, with spend shifts, structural reorganizations and the business realities mentioned above, cloud providers will be in the position to gain the upper hand."

By 2020, more compute power will have been sold by IaaS and PaaS cloud providers than sold and deployed into enterprise data centers.

The Infrastructure as a Service (IaaS) market has been growing more than 40 percent in revenue per year since 2011, and it is projected to continue to grow more than 25 percent per year through 2019.

By 2019, the majority of virtual machines (VMs) will be delivered by IaaS providers. By 2020, the revenue for compute IaaS and Platform as a Service (PaaS) will exceed $55 billion — and likely pass the revenue for servers.

"With the growth of both bimodal computing and cloud provider offerings, software-defined enterprise data centers have become less centrally important than building a strong multiprovider management capability," explained Thomas J. Bittman, vice president and distinguished analyst at Gartner. "Unless very small, most enterprises will continue to have an on-premises (or hosted) data center capability. But with most compute power moving to IaaS providers, enterprises and vendors need to focus on managing and leveraging the hybrid combination of on-premises, off-premises, cloud and noncloud architectures, with a focus on managing cloud-delivered capacity efficiently and effectively."

Additional information is available to Gartner clients in the report "Market Insight: Cloud Computing's Drive to Digital Business Creates Opportunities for Providers."