A pair of studies published a few days ago by global management consulting firm McKinsey & Company entitled IT as a service: From build to consume show enterprise adoption of Infrastructure as a Service (IaaS) services accelerating increasingly rapidly over the next two years into 2018.
Of the two, one examined the on-going migrations of 50 global businesses. The other saw a large number of CIOs, from small businesses up to Fortune 100 companies, interviewed on the progress of their transitions and the results speak for themselves.
1. Compute and storage is shifting massively to cloud service providers.
“The data reveals that a notable shift is under way for enterprise IT vendors, with on-premise shipped server instances and storage capacity facing compound annual growth rates of –5 percent and –3 percent, respectively, from 2015 to 2018.”
With on-premise storage and server sales growth going into negative territory, it’s clear the next couple of years will see the hyperscalers of this world consume an ever increasing share of global infrastructure hardware shipments.
2.Companies of all sizes are shifting to off-premise cloud services.
“A deeper look into cloud adoption by size of enterprise shows a significant shift coming in large enterprises (Exhibit 2). More large enterprises are likely to move workloads away from traditional and virtualized environments toward the cloud—at a rate and pace that is expected to be far quicker than in the past.”
The report also anticipates the number of enterprises hosting at least one workload on an IaaS platform will see an increase of 41% in the three year period to 2018. While that of small and medium sized businesses will increase a somewhat less aggressive 12% and 10% respectively.
3. A fundamental shift is underway from a build to consume model for IT workloads.
“The survey showed an overall shift from build to consume, with off-premise environments expected to see considerable growth (Exhibit 1). In particular, enterprises plan to reduce the number of workloads housed in on-premise traditional and virtualized environments, while dedicated private cloud, virtual private cloud, and public infrastructure as a service (IaaS) are expected to see substantially higher rates of adoption.”
Another takeaway is that the share of traditional and virtualized on-premise workloads will shrink significantly from 77% and 67% in 2015 to 43% and 57% respectively in 2018. While virtual private cloud and IaaS will grow from 34% and 25% in 2015 to 54% and 37% respectively in 2018.
Cloud adoption will have far-reaching effects
The report concludes “McKinsey’s global ITaaS Cloud and Enterprise Cloud Infrastructure surveys found that the shift to the cloud is accelerating, with large enterprises becoming a major driver of growth for cloud environments. This represents a departure from today, and we expect it to translate into greater headwinds for the industry value chain focused on on-premise environments; cloud-service providers, led by hyperscale players and the vendors supplying them, are likely to see significant growth.”
About McKinsey & Company
McKinsey & Company is a worldwide management consulting firm. It conducts qualitative and quantitative analysis in order to evaluate management decisions across the public and private sectors. Widely considered the most prestigious management consultancy, McKinsey’s clientele includes 80% of the world’s largest corporations, and an extensive list of governments and non-profit organizations.