Enterprise IT spending on public cloud computing, within addressable market segments, will surpass spending on traditional IT in 2025, according to Gartner Inc.

Gartner’s ‘cloud shift’ research focuses only on those enterprise IT categories that can transition to cloud, within the application software, infrastructure software, business process services and system infrastructure markets. 

According to Gartner, 51 per cent of IT spending in these four categories will move from traditional solutions to the public cloud by 2025, compared to 41 per cent in 2022. 

Further, 65.9 per cent of spending on application software will be directed toward cloud technologies in 2025, up from 57.7 per cent in 2022.

“The shift to the cloud has only accelerated over the past two years due to Covid-19, as organizations responded to a new business and social dynamic,” said Michael Warrilow, research vice president at Gartner. 

“Technology and service providers that fail to adapt to the pace of cloud shift face increasing risk of becoming obsolete or, at best, being relegated to low-growth markets,” added Warrilow.

Traditional offerings will make up 58.7 per cent of the addressable revenue in 2022, as per the report.

However, ”the growth in traditional markets will be much lower than cloud,” the report said.

“Demand for integration capabilities, agile work processes and composable architecture will drive continued shift to the cloud, as long-term digital transformation and modernization initiatives are brought forward to 2022. Technology product managers should use the cloud shift as measure of market opportunity,” it said.

In 2022, over $1.3 trillion in enterprise IT spending is at stake from the shift to cloud, increasing to almost $1.8 trillion in 2025, according to Gartner. 

Further emergence of new technologies is likely to amplify the ongoing disruption to IT markets, including distributed cloud.

“Many will further blur the lines between traditional and cloud offerings,” as per the report.

“Enterprise adoption of distributed cloud has the potential to further accelerate cloud shift because it brings public cloud services into domains that have primarily been non-cloud, expanding the addressable market. Organisations are evaluating it because of its ability to meet location-specific requirements, such as data sovereignty, low-latency and network bandwidth,” it said.

Gartner further recommended technology and services providers to target segments where the shift is occurring most aggressively, in addition to seeking new high-growth cloud opportunities to capitalise on the shift to cloud.

“Providers should also target specific personas, adoption profiles and use cases with go-to-market initiatives,” it said.

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