Cloud putting crimp in traditional software

Enterprise spending on cloud computing growing at a faster rate than overall IT spending will pose a challenge to legacy hardware and software vendors, Gartner cloud forecaster Ed Anderson says.

Cloud computing is expected to grow 19% in 2012, becoming a $109 billion industry compared to a $91 billion market last year. By 2016, it's expected to be a $207 billion industry, according to Anderson's latest findings. That compares to the 3% growth expected in the overall global IT market. During it's true that the $109 billion cloud market represents just a 3% chunk of the overall $3.6 trillion spent on IT globally, Anderson says it's after all responsible, in some cases, for a slowdown in growth for traditional on-premise hardware and software sales.

In Gartner's latest quarterly IT spending report, the technology firm for the first time broke out cloud computing as a separate forecast category, providing an in-depth analysis of current and future cloud spending trends. The hottest growth in the cloud market in the coming year will be in infrastructure as a service, which is expected to grow by 41%. Management and security is the second-hottest cloud growth area, expected to rise 27.2%, with platform as a service, SaaS and business process as a service rounding out the top five. "The cloud market is growing at a pretty rapid clip," Anderson says. "Cloud services within the broader IT spending market are after all small, nevertheless the growth rate looks promising."

Meanwhile, computing hardware sales are expected to rise only 3.4% this year to $420 billion, which compares to 7.4% growth last year. Enterprise software, afterwards increasing 9.8% last year, is expected to reach $281 billion this year, a 4.3% growth clip.

Transition for the market even though

It's nevertheless a transition for the market even though, Scott says, and not all clients are ready to fully embrace the cloud. Many European companies are adopting the research at a slower pace than U.S. counterparts. GFI will continue to offer on-premise installations as so then as cloud-based services as the company transitions its dozens of applications to a hosted model.

Network World staff writer Brandon Butler covers cloud computing and social collaboration. He can be reached at BButler@nww.com and found on Twitter at @BButlerNWW.