Cloud spending toppled on-prem data centers in 2020 for the first time

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Enterprises increased their spending on cloud infrastructure (opens in new tab) by almost 35% to reach almost $130 billion in 2020, far outpacing their spending on on-prem data centers, according to a new research.

While an increasing number of businesses had been steadily increasing their reliance on cloud computing (opens in new tab) services, the pandemic seems to have accelerated the momentum. 

The findings from Synergy Research Group comes on the heels of forecasts (opens in new tab) by data and analytics company GlobalData, which suggests that cloud data centers will soon become as indispensable as any other utility.

“60% of the servers now being sold are going into cloud providers’ (opens in new tab) data centers and not those of enterprises,” said John Dinsdale, a Chief Analyst at Synergy Research Group, confirming the trend.

The rise of the cloud

The trend towards the move to the public cloud is very apparent looking at historic data pooled by the research. 2019 was the first time when the spending on cloud platforms (opens in new tab) edged past the resources spent on acquiring servers (opens in new tab) and software for on-prem data centers.

Historic comparison of spending on on-prep infrastructure vs the cloud

(Image credit: Synergy Research Group)

In 2020, the gap between the two has widened quite dramatically with enterprise spending on data center hardware and software dropping by 6% to under $90 billion in 2020. 

“Clearly companies have been voting with their wallets on what makes the most sense for them,” says Dinsdale. 

While Dinsdale doesn’t expect to see such a dramatic decline in the spending on enterprise data centers over the next half a decade, the growth for the cloud infrastructure will continue to accelerate aggressively he believes.

Via: TechCrunch (opens in new tab)

With almost two decades of writing and reporting on Linux, Mayank Sharma would like everyone to think he’s TechRadar Pro’s expert on the topic. Of course, he’s just as interested in other computing topics, particularly cybersecurity, cloud, containers, and coding.