The International Data Corporation (IDC) Worldwide Quarterly Cloud IT Infrastructure Tracker predicts that cloud spending is going to continue to eat into traditional on-premise IT spending at a clip of 4% a year for the next five years. But the thing is, I think it’s going to cut in even bigger and faster for one reason no one seems to be talking about – most cloud services are cheaper. Generally speaking, when I’m reading about trends in cloud computing, the comparisons are around servers in the building vs. virtual servers at a hosting facility. I think that is done because it’s a comparison everyone can get their heads around. It’s like when they calculate the “miles per gallon” of electric cars. It’s a familiar construct so it works for marketing.
The reason I think on-prem spending is going to drop much faster than IDC predicts is because of the ancillary benefits that come from cloud spending. Consider this one isolated scenario: before switching to cloud-hosted we were spending thousands of dollars a year on digital certificates. This isn’t hardware or backups or electricity or cooling for our on-premise servers; this was the digital certificates we needed so we could add the handy little “s” at the end “http” on our sites. So that all fell into the IT budget under “Traditional IT.”