Infrastructure as a Service on Strong, Upward Trajectory

June, 2015

While still in its infancy, the use of public cloud IaaS is growing in popularity as an alternative to on-premises data centers. This growth is being driven by falling costs, increased availability of commercial offerings, the convenience of metered use, improvements in cloud security, little or no up-front investment, and scalability.

Figure 2 from our study, IaaS Adoption Trends and Customer Experience, shows that adoption rates and investment rates for IaaS are on a strong upward progression. Adoption has risen from 7% of all organizations in 2013 to 14% in 2014 and to 17% in 2015. Over the same period, the percentage of organizations making new investments in IaaS has risen from 6% in 2013 to 17% in 2015. Based on the accelerating investment trend, we expect that half of all organizations will have IaaS deployments within the next five years.

IAAS fig 2 - Infrastructure as a Service on Strong, Upward Trajectory

The growth is being driven by strong economic benefits. According to the findings of our survey, organizations that have implemented IaaS report a strong return on investment (ROI) experience and low risk of cost overruns. IT decision-makers appreciate IaaS for its scalability, elasticity, and failover capabilities, but concerns about security and privacy—whether warranted or not—remain in the minds of buyers. Nevertheless, we believe that for many uses, IaaS is an attractive alternative to on-premises infrastructure.

Despite these benefits, many organizations have been reluctant to trust their computing infrastructure to public cloud providers. In some cases there is resistance within the IT organization to moving the infrastructure off-site because of unease over losing control. In other cases, organizations raise security and privacy concerns over trusting the public cloud with confidential information. Given the challenges, we anticipate IaaS adoption will grow, albeit not as quickly as has been the case with SaaS.

The full study quantifies the current adoption and investment trends for public cloud IaaS, as well as the benefits driving adoption and buyer concerns holding it back. We assess adoption and investment trends by organization size, sector, and geography. We also look at the economics of IaaS by assessing the ROI and TCO experience of those that have adopted IaaS along with current investment per user. We conclude with practical advice for those seeking to gain support for IaaS investments.

This Research Byte is a brief overview of our report on this subject, IaaS Adoption Trends and Customer Experience. The full report is available at no charge for Computer Economics clients, or it may be purchased by non-clients directly from our website (click for pricing).