UK cloud spend overtakes legacy IT

It’s a positive sign for UK digital transformation as spending on cloud infrastructure outstrips on-premise IT.
16 November 2018

A data center IT engineer. Source: Shutterstock

When we talk about how businesses are trading in archaic IT systems for the benefits of flexible and efficient cloud software, we’re often lacking a benchmark by which to measure progress— and that doesn’t help to make the concept of ‘digital transformation’ any more tangible.

But research from the Cloud Industry Forum (CIF) among UK organizations reveals that, for the first time, cloud infrastructure spend has surpassed that of legacy IT.

Companies in the study devoted 19 percent of their IT budgets to cloud infrastructure, a point ahead of that spent on on-premise system (18 percent).

That gap is set to widen by 2022 when spending on legacy IT will dip to 12 percent of budgets, says CIF, as decommissioning continues and businesses increasingly embrace next-gen technologies, such as AI, blockchain and IoT.

Those same companies adopting cloud infrastructure aren’t just sticking with one provider, either; 75 percent are adopting ‘multi-cloud’ strategies— adopting two or more cloud services— and 85 percent plan to up cloud use going into 2019.

“UK businesses clearly recognize the need for transformation and are gradually leaving legacy technologies behind in favor of next-generation technologies as they pursue competitive advantage,” said Alex Hilton, CEO of CIF.

“Cloud is critical to this shift, thanks not only to the flexibility of the delivery model, but also the ease with which servers can be provisioned, which reduces financial and business risk.”

Hilton added that cloud’s ability to explore value in vast, unstructured data sets makes it an essential component for companies looking to explore the potential of IoT and AI.

Despite a willingness to cut loose old processes to bring their businesses forward, meanwhile, many companies cite similar challenges when it comes to implementation.

Chief of those is a skills shortage— a lack of employees with knowledge and experience to integrate systems and realize their potential— and a lack of support from vendors. This has prompted the CIF to call for improvements in vendors’ support and service capabilities, to help business decision-makers understand the transformative potential of cloud products.  

[…] it’s clear that the majority of UK organizations are right at the start of this journey and many are being prevented from exploiting IoT, blockchain and AI due to skills shortages, a lack of vision, and, indeed, a lack of support from vendors,” said Hilton.

Meanwhile, 15 percent of respondents said they would struggle to find the right partner to assist in the implementation process, so while willingness to adopt cloud technology is not in short supply, there is plenty of room for improvement on the supply-side of the channel.