2014 IT Spending Expected to be Lower Thanks to the Cloud

The cloud is no longer just a buzzword, it is here to stay and the data is starting to show it. In 2014, it is expected that global IT spending will only increase in the single digits of percentage points as compared to 2013 overall spending. The conclusion of a report by Barclays said, “We believe the deflationary impact from the cloud ($1 spent on cloud infrastructure actually results in several dollars coming out of other IT end markets) should prevent IT spending from growing meaningfully in 2014 and 2015.”

This report makes sense as cloud technology’s main objectives are to simplify operations, constrain costs and reduce overhead. This undoubtedly helps small to medium enterprises scale out their technical operations. The large technology vendors who haven’t adapted to the cloud stand the most to lose. The need for data center gear will go down as well. As more small to medium enterprises realize that they can use public cloud technologies to deploy their applications, the archaic means of building out a data center on-site will undoubtedly fade away.
The report by Barclays says that the most impacted companies will be EMC and IBM. These companies have made their mint off of selling datacenter infrastructure. Now that an impressive infrastructure already exists, these companies should lose sales to smaller outfits that no longer see it beneficial to build out their own NOC. Barclays also mentioned Big Data providers will benefit the most from this shift in the IT landscape. Managing Big Data seems to be next untapped market in the cloud game. The old way of doing IT involved intense server maintenance and infrastructure know-how. All of that has been figured out with the cloud and companies will begin trimming unneeded resources thus causing the overall demand of datacenter gear to eventually taper off.