News

IT Trends: Cloud Computing Tops Investments for First Time in 10+ Years

• By David Ramel
• 02/12/2021

The Society for Information Management (SIM) released an IT trends study that shows in 2020 cloud computing was the top organizational investment for the first time in more than 10 years, usurping perennial leader "Analytics, Business Intelligence and Related Technologies."

The 40th anniversary SIM IT Trends report is based on a survey of more than 1,000 members of SIM, a professional organization catering to senior IT leaders.

"We had about 350 CIOs participate and around 600 organizations provide feedback to questions and were fortunate to gather great insights related to things like the most-used IT performance metrics and measures," said CEO Mark Taylor. "We analyzed IT budgets, staffing, salaries, cybersecurity, and cloud computing efforts, and we asked what keeps them up at night. The study also examined readiness and response to the COVID-19 pandemic."

The top five IT management issues both this year and last were Cybersecurity, Alignment of IT with the Business, Data Analytics, Digital Transformation, and Compliance and Regulations, SIM said.

While IT management issues and IT investments remained largely the same year-over-year compared to 2019, the ascension of cloud computing (including software/platform/infrastructure as-a-service offerings) as the top investment reported by organizations was one of several notable changes in that category.

"First, and most significant, is the increased ranking of Collaboration Tools from 16th in 2019 to 8th in 2020, its highest ranking ever. This indicates the need for many organizations to enable off-premises work in response to COVID-19. This, along with investments in Networks & Telecommunication, displaced investments in Legacy Applications (9th in 2019, 12th in 2020) and Application Integration (10th in 2019, 13th in 2020). Finally, after more than a decade as the most selected IT investment, Analytics, Business Intelligence and Related Technologies was unseated by Cloud Computing."

A seemingly contradictory finding in the category of top IT management issues shows cloud computing falling from No. 6 on the 2019 list of issues most important to their organizations to No. 9. On the list of most important or worrisome issues to IT leaders, cloud computing rose one notch to No. 16.

Cloud computing also topped the list of "Organizations' Largest IT Investments, Those that Should Get More and the Most Personally Worrisome."

The report's findings complement other studies that have reported increased spending on cloud computing, such as this one from November: "COVID-19 Fuels Cloud Computing Spending Boom."

Other cloud computing findings included:

• Use of Cloud and Shared Services: Of the 446 reporting organizations, 98.4 percent indicated that they used Cloud Services and Solutions which is consistent with the 98.5 percent reported in 2019. These organizations, on average, delivered 49.9 percent “of all IT services” via the cloud, which continues the strong upward trend that began in 2015.
• Cloud-Based IT Services and Solutions: Only 1.6 percent of organizations reported no cloud-based IT in 2020 compared to 1.5 percent in 2019 and 2.5 percent in 2018. Only 25.1 percent reported that 20 percent or less of IT services were cloud-based, down almost 32 percent from 36.9 percent in 2019.
• External Cloud Usage: An increase was reported by 75.4 percent of respondents, down from 78.1 percent reported in 2019 and 78.9 percent in 2018, while 23.1 percent reported no change.

As always, security and related concerns (cybersecurity and privacy) dominated many of these charts, topping the lists for Most Important IT Management Issues; IT Leaders' Personally Most Important/Worrisome IT Management Issues; and Personal and Organizational IT Management Issues.

"The top 10 IT management issues and concerns of organizations remained fairly stable in 2020, with one change in composition and only moderate changes in the percentage of organizations selecting," SIM said. "Security, Alignment, and Data Analytics stand firm as the most important IT management issues of organizations. However, presumably due to COVID-19, several changes are apparent this year. Not surprisingly, Business Continuity moved up dramatically from 16th in 2019 to 7th in 2020. Accompanying this was increased interest in Cost Reduction and Controls for both IT and the business.

"Despite Cloud Computing falling three spots to ninth, the percentage of respondents selecting it a top issue was only 6.9 percent lower than last year's 19.7 percent. Similarly, Business Agility dropped from seventh to 10th but the percentage selecting it only fell 5.2 percent. Innovation fell from ninth in 2019 to 11th, likely reflecting a current focus on keeping business functions operational rather than expanding business capabilities."

This year SIM, which has been issuing its IT Trends reports since 1980, included a special section on the COVID-19 pandemic.

"When asked about preparedness to handle a disruption to operations; respondents reported effects of the pandemic on facilities, infrastructure, networks, and resources required for a shift to remote work and virtual operations, SIM said. "Despite these challenges, 51.1 percent indicated the speed of their response was 'extremely fast' and 36.2 percent responded 'somewhat fast.'"

"This speed was arguably out of necessity," said Professor Leon Kappelman, primary investigator of the research team, "yet a great deal of their response was limited to repurposing and increasing existing capacity. A difficult and costly endeavor, but one with which most IT leaders are very adept and experienced." SIM said these changes were not easy for organizations, as only 10.1 percent indicated that it was "extremely easy." Also, "Nearly two-thirds of IT leaders believe that these changes are likely to remain in place after the pandemic is over," Kappelman added.

The report is available to SIM members for free and to others for $995.