Dive Brief:
- Enterprises are leaning on cloud to satisfy a hunger for generative AI and machine learning capabilities, according to Foundry research published Tuesday.
- Migration rates rebounded this year, with 63% of respondents reporting accelerated cloud adoption over the last year, compared to 57% in 2023 and 63% in 2022. The market intelligence firm surveyed 821 global IT leaders charged with cloud procurement decisions in May for the 11th annual report.
- Despite ongoing talent shortages and heightened cost concerns, companies will allocate more than one-quarter of IT budgets for cloud in the next year, spending an average of $95 million on the technology, the report found. Nearly two-thirds of respondents plan to devote cloud budget to AI and machine learning platforms.
Dive Insight:
Large cloud providers have already detected signs of a surge in cloud consumption — and are responding accordingly. AWS, Microsoft and Google Cloud sparked a data center building boom during the first half of the year, driving up capacity as vacancy rates bottomed out.
Overall, cloud consumption has grown at a brisk rate, roughly 20% year over year for the last nine months, according to Synergy Research Group’s latest market analysis. IDC expects the growth rate to remain at that level through 2028, pushing annual cloud spending to more than $800 billion this year.
“Cloud is the critical infrastructure backbone for enterprises in every industry and size globally, but its scope is expanding,” Tracy Woo, principal analyst at Forrester, said in a recent blog post.
“The standard definition of cloud as basic infrastructure services from a major public cloud provider has widened to include edge with intelligent capabilities and generative AI-augmented services that span from operations to application development,” Woo said.
Forrester saw cloud-based AI product proliferation and adoption reach a “fever pitch” this year, according to an August report.
Foundry’s research revealed a split among respondents over where to run AI workloads. While 30% of respondents preferred public cloud, nearly the same proportion opted for a hybrid mix of cloud and on-prem and 24% leaned toward private data-center cloud.
Nearly half of IT leaders grappled with cloud cost constraints, despite rising budgets. Concerns over security and compliance plagued 35% of respondents. IT systems integration roadblocks and cloud engineering skills gaps were nearly as prevalent, according to Foundry.
