Share of Cloud Services for Critical Loads to Double in Five Years

Data center capacity has been trending more and more towards “hyperscalers,” or public providers of cloud services, which according to market intelligence research group Synergy accounted for 37 percent of all capacity last year, almost double the percentage capacity five years ago.

The percentage capacity is split half-and-half between owned and leased data centers, with non-hyperscale colocation capacity accounting for another 23 percent of the total. On-premises data centers remained the largest segment of data center capacity at 40 percent.

In the next five years, cloud services are expected to surpass on-premises solutions in total capacity for critical IT load. Owned and leased hyperscaling services will make up more than half of all capacity, while on-premises will drop to below 30 percent.

Cloud services spending to expode

While the capacity percentage of on-premises will decline over the next five years, the actual capacity of on-premises will only decline marginally. Like the previous five years, we are seeing businesses spend far more on cloud infrastructure services, while retaining some if not all of their on-premises IT hardware and software.

“Ten years ago, enterprises were spending over $80 billion per year on IT hardware and software for their own data centers, while spending well under $10 billion on nascent cloud infrastructure services,” said Fazuk Balkaya, cloud and telecommunications analyst at Synergy Research Group, in a statement when the report was released. “Fast forward to the present day and spending on data center hardware and software has only grown by an average 2 percent per year, while spending on cloud services has ballooned, growing by an average 42 percent per year to reach $227 billion in 2022.”

More operations are being handled on the cloud, and it appears a lot of industries which were once against moving critical and sensitive workloads to the cloud are beginning to change their attitude. The flexibility, scalability, and security that comes with new cloud technologies, some of which is unavailable through on-premises, is likely to continue drawing in new customers.