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Global Cloud Computing Services Outlook for 2017

As we look back on the business technology-related trends of 2016, the huge adoption of Hybrid IT methodologies come to mind. More enterprises have combined on-premises systems of record with off-premises systems of engagement to form a cohesive foundation for their digital transformation agenda.

Business leaders currently spend about 28 percent of their total enterprise IT budgets on hosting and cloud computing services, according to the latest worldwide market study by 451 Research. Moreover, the outlook for 2017 is encouraging -- that investment is now forecast to reach 34 percent.

The analyst believes that there's a growing reliance on external sources of infrastructure, application, management and security services. Although vendors frequently position themselves as primarily suppliers of infrastructure, the study finds that just 31 percent of spending goes towards infrastructure services.

Meanwhile, nearly 70 percent of enterprise budgets for hosting and cloud is being spent on other services -- such as 42 percent on Application Services; 14 percent on Managed Services; 9 percent on Security Services; and 5 percent on various Professional Services that are used in cloud enablement.

Cloud Computing Market Development Trends

The research reveals that a significant portion of this spending is on un-managed or self-managed infrastructure or application services. In fact, 44 percent of infrastructure services spending and 49 percent of application services spending is for products that are bundled with additional managed or security services.

"The markets for un-managed IaaS and SaaS are dominated by large, hyperscale vendors. However, this spending trend indicates there is an appetite for the type of bundled services a broader market of managed service providers are well positioned to deliver," said Liam Eagle, research manager at 451 Research.

According to the 451 Research assessment, there's a significant opportunity for service providers offering a diversified set of hosting and cloud services which includes infrastructure and application hosting, as well as managed services and security services delivered around them.

The survey findings also indicate that enterprises use hosting and cloud services supplied by a broad range of providers. Public cloud infrastructure providers, which are used by 69 percent of respondents, are the most common, followed by managed hosting providers, used by 26 percent of enterprises. IaaS and SaaS usage is strong and these markets are dominated by a few established vendors.

The market for managed infrastructure and application services is a longer tail market, with greater opportunities for providers who emphasize expertise in operating, optimizing and securing the infrastructure and application products they deliver.

The study marks the first results for this new survey line within 451 Research 'Voice of the Enterprise' service. It tracks the services enterprises buy as they move on-premises workloads into hosted and cloud infrastructure and application environments.

Based on research conducted during August and September 2016, with more than 580 IT professionals worldwide, the quarterly study combines analysis with survey responses and in-depth interviews from a panel of more than 45,000 senior IT buyers and enterprise technology executives.

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