The State of Tech Spend in 2020

State of Tech Spend

“Optimizing IT spend offers a major opportunity to redirect savings to invest in high-priority transformational initiatives,” states the Flexera 2020 State of Tech Spend Report. The enterprise is moving headlong into digital transformation, with a prediction of 83% of enterprise workloads in the cloud by this year. Digital transformation to the cloud is no longer optional, it is a must have for enterprises today.

The Enterprise is Investing in Digital Transformation

What are the financial investments enterprises are making in their transformation to cloud? Here are a few key stats on the move to cloud from Flexera’s report:

1) “Cloud spend has surpassed on-premises software spend, with 22% going for on-premises software and 25% for cloud, with 7% for software as a service (SaaS), and 18% for infrastructure as a service (IaaS) and platform as a service (PaaS) combined.” Key takeaway: enterprises are now spending slightly more on cloud and as-a-service cloud products and software than on on-premise software.

2) “While 40% of respondents currently have six or more data centers, 33% of respondents plan to significantly reduce the number of data centers next year.” Key takeaway: enterprises are consolidating their data center usage.

3) “32% of workloads are already in the cloud, across SaaS, IaaS and PaaS, and cloud workloads are expected to increase to 43% in the next year.” Key takeaway: a significant portion of enterprise workloads already exist in the cloud today and continuing to shift toward cloud.

IT’s Priority Initiatives 

The below chart illustrates that cloud is a high priority for enterprise IT teams. Digital transformation and cloud-first/cloud migration are the first and third highest priorities respectively for the majority of respondents.

top 3 priorities

Key Cost Challenges for IT Today

There is a long way to go for many enterprises when it comes to optimizing their IT costs. As the below chart shows, 43% of enterprise IT teams struggle with manual processes that hold up processes and workflows, creating huge, costly inefficiencies for their businesses.

challenges in managing IT spend

Enterprises Are Shifting to Cloud

As illustrated in the chart below, SaaS (software as a service), IaaS (infrastructure as a service), and PaaS (platform as a service) together comprise 25% of IT spend. Spend on on-premise software is on the decline, while public cloud and SaaS spending is on the rise. “These results indicate a significant shift to cloud solutions,” the report states. “More than 80% of respondents plan to boost cloud and SaaS spend.”

IT Spend Breakdown

On a workload level, this shift is moving rapidly to the cloud. Per the chart below, “almost one-third of workloads have already moved to IaaS, PaaS or SaaS, and respondents will continue to move more of their workload to the cloud over the next 12 months. An additional 11% will reside in the cloud within the next year. That means the proportion of cloud-based workloads will approach 50% within 12 months.

Cloud Workload Breakdown

Conclusion

The enterprise not only recognizes the need for digital transformation and cloud adoption as imperative for businesses to be future-proofed and competitive, but it is actively moving toward undergoing that transformation. In doing so, companies will optimize their spend and often see savings along the way.

Curious about how to begin digital transformation for your enterprise? Let’s talk