Skip to main content

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The original concept of 'Hybrid Cloud' service deployment now seems outdated.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.

Popular posts from this blog

How Savvy Pioneers Lead the Future of Work

Hybrid and fully remote work are inevitable in the Global Networked Economy where high-performance talent demands flexibility from employers. To enable these progressive work models, organizations are investing in a wide range of technologies to support more agile types of employment.  According to the latest worldwide market study by International Data Corporation (IDC), leading organizations will spend nearly $1 billion on the Future of Work (FoW) in 2023 -- that's an increase of 18.8 percent over 2022. Future of Work Market Development "Work models continue to evolve, but 37 percent of decision-makers in a recent global survey note that Remote and Hybrid work models will be an embedded part of accepted work practices, supported by a continued shift to the cloud, increasingly instrumented and interconnected physical workplaces, and intelligent digital workspaces," said Holly Muscolino, group vice president at IDC . According to the IDC assessment, organizations must mak

Human Resource Transformation Enabled by IT

Many senior executives are taking a proactive approach to digital business transformation in order to achieve their strategic goals. Delivering revenue growth and profitability is now imperative for every function, including Human Resources (HR). The top 3 priority HR technologies this year are skills management, learning experience platforms, and internal talent marketplaces, according to the latest worldwide market study by Gartner. "With a tumultuous global economy, HR technology leaders face a balancing act in 2023," said Sam Grinter, director at Gartner . "Leaders must anticipate greater levels of accountability and demand for measurable outcomes to justify new technology investments." HR Transformation Market Development Forty-four percent of HR leaders report driving better business outcomes is their number one strategic priority for HR technology transformation over the next three years. Growth in headcount and skills (26 percent) and cost optimization (17 p

Virtual Reality Market Set to Reach $100 Billion

Virtual Reality (VR) market growth is now finally coming to fruition. Thanks to current actions and market momentum, VR is approaching what can be considered critical mass. And, not a moment too soon. This growth momentum comes from new hardware and content releases, accelerating enterprise value recognition, and a significant metaverse wild card that could potentially lift adoption and usage. According to the latest worldwide market study by ABI Research, over 85 million VR Head Mounted Displays (HMDs) will be shipped in 2027 across consumer and enterprise segments, creating a $100 billion VR market that includes hardware, software, and services. Virtual Reality Market Development "Expectations have been high in VR for years, and even decades, without notable growth to show. That growth is finally coming over the next five years," said Eric Abbruzzese, research director at ABI Research . The barrier to entry is lower than ever, all while content performance and user experien