European firms to spend US$8.2bn on cloud by 2015

14 Jun 2011

European enterprises are increasing their spending on cloud migration and it is estimated that in 2015 some US$8.2bn will be spent on cloud professional services, up from US$510m in 2010.

“The early adopters typically started using cloud solutions in parallel with their existing IT, but in 2010 we have seen more companies starting to migrate existing solutions to the cloud and to create a road map for future migration,” said research director Mette Ahorlu, of IDC’s European services group.

“We don’t expect everything to go to the cloud, but the early adopters are likely to move a majority of their IT to cloud within the next five years, and the vast majority will follow suit within a few years.

“The new IT environments will have elements of traditional IT, private cloud and public cloud, and management and integration will become a challenge for which European enterprises will typically choose to hire an external service provider, driving further growth in the cloud professional services market,” Ahorlu said.

Outsourcing contracts spur cloud services growth

IDC sees a clear trend that new outsourcing contracts include cloud services, and as much as 25pc of cloud professional services will be delivered as part of outsourcing contracts.

This has a major influence on the choice of provider for professional services, as well as for cloud services: the provider needs to be able to manage both the traditional and the new environment under one contract and needs to be able to migrate larger parts to the new environment during the life of the contract.

“There is a huge migration and integration task ahead, which is good news for service providers, who can expect their traditional revenue to start falling because cloud services are so standardised. Even consulting and migration are standardised and therefore cheaper than traditional consulting and integration services. This is also very good news for the customers – they will get more value for money,” said Ahorlu.

“Some believe that cloud is just plug and play, but that is not the case for the more complicated existing or new solutions. So professional services will not go away, but they will change and in the longer run beyond 2015 – when migration is complete – account for a much smaller proportion of IT costs.

“Another important point is that service providers need to prepare for the rapidly growing request for cloud professional services and have the resources available. Right now, demand is mainly for business cases and road maps, requiring both business competence and architectural competence, but on a limited scale.

“But in a just slightly longer time frame, most, if not all, consultants need to understand cloud. Vendors have substantial investments ahead of them in creating the necessary capabilities to support this rapidly evolving market,” Ahorlu said.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years