Australian organisations are increasingly flocking to the cloud, enticed by its associated cost and performance benefits. What the cloud also offers businesses is the ability to subscribe to a variety of services that were previously out of reach, which is particularly attractive as more move to an internal service provider model, where the IT department acts as a service broker. Cloud adoption grew within Australian organisations throughout 2015, and 2016 will be no different, with industry analysts all predicting expansion within the local cloud market.
Cloud spending on the rise
While global IT spending will hardly grow this year, Gartner forecasts that Australian IT spending will grow 2.8% to reach $79.9 billion, $29 billion of which will be dedicated to IT services, including cloud. According to a Gartner statement, this growth is due to “accelerating momentum in cloud infrastructure adoption and buyer acceptance of the cloud model”.
In its 2015 Australian Infrastructure & Cloud Computing Market Study, Telsyte explains how Australian organisations are changing in response to digital disruption. Currently, two thirds of IT budgets are spent on OPEX rather than CAPEX, with nearly 20% spent on cloud infrastructure and applications. But this ratio will shift towards OPEX as CIOs look to increase spending on cloud services and more suppliers move to ‘as a service’ delivery models. Telsyte forecasts that the market value for public cloud infrastructure services will more than double by 2019, reaching $775 million, up from $366m in 2015. By this point, cloud IaaS will be in use by 85% of Australian enterprises.
This uptake of cloud computing is aligned with key themes to transforming and improving business operations. According to the Telsyte report, the top priority for Australian organisations this year is improving profitability by driving top line revenue growth and realising bottom line cost savings. This can be achieved with the cloud, as organisations are able to improve operational efficiency, lower CAPEX costs, and capitalise on commercial flexibility by paying on a consumption basis.
In addition to this, improving customer experience was identified by Telsyte as a top driver for cloud computing, with decision makers recognising its impact of the insights it yields on both the top and bottom line, in terms of customer acquisition, management and retention.
Cloud as a managed service
As the cloud delivery model has become mainstream for IT infrastructure, more CIOs are moving workloads to public providers depending on type and strategic importance to the organisation. The Telsyte study found that Australian organisations are favouring managed service providers as opposed to ‘transactional’ cloud providers when it comes to procuring Infrastructure as a Service (IaaS), with 42% using a managed service public cloud provider. This is in line with the results of the Logicalis Global CIO Survey released late last year, in which almost half of CIOs (47%) reported that at least 30% of their IT is provided by external service providers, including cloud.
In a service defined world, where the power has shifted away from IT and into the hands of the end users, CIOs need to be able to deliver a consumer-like IT experience at work. By moving to a cloud model, the IT department is able to offer the choice of services their organisation needs – whether those services are consumed directly from the cloud, or come from a managed service provider, as is the growing trend among Australian organisations.
To read more about how moving to a cloud model can facilitate business transformation, and to determine the right cloud strategy for your organisation, download our eBook, 'Selecting the right cloud'.
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