Public Cloud Services: A Jekyll and Hyde Impact on IT Spend

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Public cloud services are creating a strange dichotomy, having both a positive and negative impact on IT services spending.

That's according to a new report from Gartner, the tech researcher, which says public cloud services are simultaneously cannibalizing and stimulating demand for external IT services.  Infrastructure as a service (IaaS) adoption – the most basic and fundamental form of cloud computing service – has expanded beyond development and test use cases.

"Public cloud adoption is accelerating and public cloud services do, and will, cannibalize IT services spending in the coming years, most notably in the data center," said Bryan Britz, research director at Gartner. "At the same time, public cloud adoption offers service providers the opportunity to accelerate externalization of spending for the non-public cloud workloads and IT operations and service management responsibilities in tandem with clients pursuing a public cloud initiative."

Nineteen percent of organizations polled in a recent Gartner survey said they are using cloud computing for most of production computing, and 20 percent are using storage as a service for all, or most, storage requirements. Gartner surveyed 556 organizations from June 2012 through July 2012, across nine countries and multiple industries where cloud planning is critical.

Public cloud adoption varies by service, the survey found. IaaS is moving from lower-risk pilot programs and into production environments. Platform as a service (PaaS) adoption also clearly indicates the growing strategic importance of public cloud services for organizations that are adopting cloud infrastructure to support their business needs. Current and anticipated adoption rates of PaaS are leading indicators of a more substantive move to cloud environments and represent an opportunity for service providers to deliver PaaS-oriented solutions to help their clients make this move, Gartner said.

Software as a service (SaaS) adoption, particularly in large enterprise application suites, will continue to reduce the total potential market available for application outsourcing. At the same time, SaaS adoption in the near term offers consulting and implementation services opportunities for IT services providers, as well as ongoing integration and configuration. The move to SaaS will help drive additional revenue to the application outsourcing market by drawing applications to external, cloud-based implementations where they would otherwise be considered only for internal deployment.

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