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Hybrid Multi-cloud: Why IT Coexistence Strategy Prevails

The original concept of 'Hybrid Cloud' service deployment now seems outdated. In practice, few enterprise IT organizations have embraced private cloud models. And, even fewer will modernize their legacy non-cloud IT applications or the systems where they reside in the corporate data center.

That said, new IT infrastructure investment continues to shift as more leaders execute their digital transformation plans. Many enterprise CIOs and CTOs prefer to develop customer-facing applications within public cloud environments, and then connect those Web services to apps and data that reside on legacy systems within their on-premises data center. The vendor impact is apparent.

Vendor revenue from sales of IT infrastructure products (server, enterprise storage, and Ethernet switch) for cloud environments -- including public and private cloud -- increased 2.2 percent in the first quarter of 2020 (1Q20) while investments in traditional, non-cloud, infrastructure declined 16.3 percent year-over-year, according to the latest market study by International Data Corporation (IDC).

Cloud IT Infrastructure Market Development

The economic impact of COVID-19 pandemic was a major factor in the first quarter. Widespread lockdowns across the world and staged reopening of economies triggered increased demand for cloud-based services that fueled procurement of server, storage, and networking infrastructure utilized by public cloud service providers.

As a result, the public cloud was the only deployment segment escaping year-over-year declines in 1Q20 reaching $10.1 billion in spending on IT infrastructure at 6.4 percent year-over-year growth. In contrast, spending on private cloud infrastructure declined 6.3 percent year-over-year in 1Q to $4.4 billion.

IDC expects that the pace set in the first quarter will continue through the rest of the year as cloud service adoption continues to get an additional boost driven by demand for more efficient and resilient infrastructure deployment.


For the full year, investments in cloud IT infrastructure will surpass spending on non-cloud infrastructure and reach $69.5 billion or 54.2 percent of the overall IT infrastructure spend.

Spending on private cloud infrastructure is expected to recover during the year and will compensate for the first quarter declines, leading to a modest 1.1 percent growth for the full year.

Spending on public cloud infrastructure will grow 5.7 percent and will reach $47.7 billion representing 68.6 percent of the total cloud infrastructure spend.

According to the IDC assessment, the disparity in 2020 infrastructure spending dynamics for cloud and non-cloud environments will ripple through all three IT infrastructure domains -- Ethernet switches, server compute, and storage platforms.

Within cloud deployment environments, compute platforms will remain the largest category of spending on cloud IT infrastructure at $36.2 billion, while storage platforms will be the fastest-growing segment with spending increasing 8.1 percent to $24.9 billion. The Ethernet switch segment will grow at 3.7 percent year-over-year.

At the regional level, year-over-year changes in vendor revenues in the cloud IT Infrastructure segment varied significantly during 1Q20, ranging from 21 percent growth in China to a decline of 12.1 percent in Western Europe.

Outlook for Cloud IT Infrastructure Investment

Long term, IDC expects spending on cloud IT infrastructure to grow at a five-year compound annual growth rate (CAGR) of 9.6 percent, reaching $105.6 billion in 2024 and accounting for 62.8 percent of total IT infrastructure spend.

Public cloud data centers will account for 67.4 percent of this amount, growing at a 9.5 percent CAGR. Spending on private cloud infrastructure will grow at a CAGR of 9.8 percent. Spending on non-cloud IT infrastructure will rebound somewhat in 2020 but will continue declining with a five-year CAGR of -1.6 percent.

Given the current trends, the opportunities for adapting legacy software applications via modernization and refactoring -- enabled by transformation into cloud services and/or container-based microservices -- must be carefully considered. Existing IT workloads rarely migrate fully to cloud service equivalents. Instead, new cloud-native apps can tap into the resources on legacy systems via RESTful APIs.

Furthermore, mature workloads infrequently move from one public cloud service provider to another. The term 'Multi-cloud' more often means the selection of independent purpose-built cloud services that remain with the best-fit hyperscale service provider. Working together, these clusters of independent services coexist with each other, but without significant integration. Why? By design, the cloud service environment is loosely-coupled. That's why an open IT architecture is an advantage.

The most effective 'well-architected framework' is open, to enable customer choice. I believe that savvy leaders will perform a detailed analysis to fully comprehend the business value and operational cost of maintaining legacy systems, versus the expense of public cloud service subscriptions. Both IT delivery models have benefits. Plus, both models can be enhanced by a progressive DevOps growth mindset.

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