Why hardware spending remains at the top, despite the shift to the cloud

Before COVID-19, the winds of change gently guided workloads towards the public cloud platforms like AWS and Azure. Then, in 2020, the pandemic-driven shift to remote work has spurred change and spurred cloud migration plans in many organizations. Despite the move to the cloud – spending on hardware still comes first.

The server on the premises is dead? No! No, they are not

Around this time, you may notice an increase in the number of articles claiming that “on-premises servers are dead” and that the pandemic will mark the downfall of hardware.

Some hardware spending has actually moved to cloud services since 2020, but reports of server deaths and an impending drop in all hardware spending have been swarming. great a lot.

Reliable future technology trends and spending behavior

How do I know? I don’t have a crystal ball, but my company, Spiceworks Ziff Davis (SWZD), has a very reliable way to predict future technology trends and spending behavior.

Voice of IT

Through the Spiceworks Community, we’ve built authentic relationships with millions of technology decision-makers who visit the site to exchange best practices and discover how technology can help. solve business problems. Research specific solutions that interest them.

Many members are eager to voice their opinions to our research team through Voice of IT, our research program. follow the trend across a wide range of technologies. This invaluable feedback from IT experts in strategy provides us with useful insights that we can share with everyone in the industry, including IT buyers, suppliers, and journalists. .

Rising Cloud

Remote workers have increased cloud adoption. In one Research Recent Cloud TrendsIT buyers say that half of their workloads will run in the public cloud by 2023, up from 40% in 2021. Additionally, more than a third of organizations say they have accelerated their plans. Cloud migration plan due to COVID-19.

Without a doubt, there are strong use cases for many businesses to move workloads to the cloud and have the data to back this up.

Current confidence of IT buyers despite moving to the cloud

  • 80% say the cloud is useful in supporting remote employees
  • 54% think cloud providers can provide superior security over their own data centers
  • 50% said their organization prefers paying for infrastructure as a recurring operating expense over a larger capital expenditure

But while leveraging the cloud is attractive for many use cases across many organizations, this delivery model isn’t a magic bullet that solves every IT problem.

Hardware is here and Hardware Spending is always at the forefront

Our research shows that hardware still accounts for the largest share of IT spending despite the ups and downs of the cloud. According to the State of IT, annual report on technology adoption and spending30% of IT budgets will be allocated to hardware by 2022, compared to 26% for hosted/cloud-based services.

While it’s true Cloud budget has increased (in 2020, they account for 22% of IT budgets), the truth is that very few organizations will completely abandon their on-premises servers. According to the SWZD Hardware Trends 2022 and Beyond, 94% of businesses still plan to use self-hosted physical servers in the future, and for a variety of reasons.

Data-powered reasons Why spending on hardware is here to stay

  • The cloud is not 100% resistant

    Over-compliance with cloud services can lead to downtime and loss of productivity. Incidents can be rare, but they are inevitable. Many businesses require a degree of redundancy and fault tolerance to important application And service. Many organizations don’t want to risk having their business stalled due to outages in cloud provider or connection problem with ISP.

  • The future is the future

    • Rather than abandoning on-premises hardware, most organizations are planning a future future where they can easily run workloads wherever and whenever it works best, whether on-premises or in the cloud.
    • Hybrid cloud adoption (integrating on-premises infrastructure with the public cloud) often requires many organizations to modernize their server infrastructure, which in turn drives hardware spending: 36% of companies now have the ability to incorporate, and an additional 18% plan to implement them within two years.
  • New models are bringing the convenience of the cloud to on-premises infrastructure

    • The “pay-as-you-go” cloud model is getting deeper and deeper into a server room near you. Much hardware supplier now provides on-premises infrastructure “as a service” where customers pay to use on a consumer basis, the same way they do with AWS or Azure.
    • These solutions (named as composable and on-demand infrastructure) are designed to be interoperable with public clouds, providing organizations with interoperability. It’s easy to achieve flexibility through a product that offers hybrid cloud capabilities by design and a cloud-like billing structure.
    • 25% of organizations have adopted payment-as-a-service solutions for on-premises infrastructure, and another 12% plan to be within two years.
    • More than half (57%) of businesses expect to adopt a “pay-as-you-go” consumer infrastructure by the end of 2023.
  • Most of the workforce will stay in place after the pandemic is over

    • While cloud services are great for supporting remote workforces, most work-from-home workers won’t last forever. According to SWZD The Future of Remote Working Studies74% of the workforce will return to the office fully once the pandemic is over.
    • Moving data back and forth from a public cloud can be expensive. From a budget and latency perspective, on-premise hardware makes more sense for many organizations where most employees will regularly report to the office.
  • Not every organization can use cloud services

  • Reduced price will spur interest in buying memory

    • As fast flash-based storage technologies become more affordable, enterprises have big plans to accelerate their on-premises infrastructure, which will help ease storage bottlenecks.
    • 37% of companies are currently using ultrafast NVMe storage technology in server rooms, and an additional 17% are planning to adopt the technology by the end of 2023.
    • The use of previously price-prohibited all-flash arrays will increase dramatically over the next two years: 24% of companies are currently using the technology, and 20% are expected to grow within the next two years. next two years.
  • Businesses plan to diversify their server purchases

    • As companies invest in new servers, they are increasingly willing to buy servers powered by non-Intel processors.
    • Currently, 30% of enterprises use AMD server processors, and an additional 14% plan to start using them in the next two years.
    • ARM server processor adoption is expected to double from 11% of enterprises now to 22% within the next two years.
  • Demand for client devices will drive hardware spending

    • Cloud or no cloud, end users will need a device to do their job. After moving to remote work, mobility is now premium (remember how hard it was to get a laptop at the start of the pandemic?).
    • Laptops will account for the largest percentage of hardware budgets in 2022 (19%), followed by desktops (14%) and servers (11%).
    • As laptops become more popular, businesses will spend more on client devices. Unfortunately, while desktops can usually last 5-6 years before requiring replacement, less durable laptops don’t perform well either.

Future hardware spending

In 2022, spending on hardware will still top the list, with 30% of IT budgets going to hardware versus 26% allotted to cloud services.

Our hardware trends for 2022 and Beyond research (SWZDdotcom) have concluded that adoption over the next two years is expected to increase significantly in AMD-powered, all-flash storage servers and consumption-based infrastructure models. Additionally, the shift to telecommuting will likely continue to drive laptop spending.

Despite the buzz around the cloud, any claim that spending on hardware is dead should be considered salt in the water. Almost every business will continue to use on-premises servers in the coming years, as more companies continue to invest in new on-premises technology.

The cloud isn’t going to replace on-premises servers and infrastructure any time soon. Instead, on-premises storage will become more like the cloud, and businesses will increasingly have the ability to seamlessly move workloads between server rooms and the public cloud of their choice.

The result will be a world where businesses will enjoy the benefits of increased flexibility and resiliency. They’ll have more options and the flexibility to run workloads wherever best suits their individual needs.

Image credit: by Tima Miroshnichenko; Bark; Thank you!

Peter Tsai

Peter Tsai is Head of Technology Insights at Spiceworks Ziff Davis (SWZD), the trusted global marketplace that connects technology buyers and sellers. For more than two decades, he has lived IT inside and out, working as a system administrator, programmer and server engineer. Peter now conducts business technology research and shares valuable technology insights through content that helps IT professionals and technology vendors do their jobs better every day.

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