Microsoft Azure set to benefit from growth in cloud computing spending during 2021

New research indicates that the growth in remote working will see significant spending on cloud solutions in 2021, with 61% of respondents planning to increase their spending on the Microsoft Azure cloud.

The recent ‘State of Tech Spend Report’ by Flexera surveyed over 470 organisations across North America and Europe. The results show the dramatic impact of the COVID-19 pandemic, forcing organisations to accelerate their digital transformation efforts to support major changes in how and where people work and to mitigate the negative impacts of the economic downturn. Nearly half of IT staff members now work from home and it is estimated that 20% of people who are now working at home will do so permanently after the pandemic ends.

Surge in cloud spending

The study found that nearly half (49%) of respondents expect to increase their overall spending on IT-related initiatives in 2021 compared to 2020. Over one in 10 surveyed expect that increase to be “significant”.

And given the change in working practices, it’s hardly surprising that cloud initiatives will be at the forefront of this spending increase, with nearly half (48%) of respondents considering “cloud/cloud migration” as a top IT initiative, up from 40% in 2020. Other top initiatives planned for 2021 are digital transformation and cybersecurity.

Many organisations (42%) have become more open to moving to the cloud since the pandemic began, with respondents planning to allocate a combined 30% of their budgets toward IaaS/PaaS/SaaS. This compares with just 24% to on-premises software. 
Further emphasising this shift towards the cloud is the fact that 62% of respondents will reduce their use of data centres in the next 24 months, with 27% planning significant reductions in data centre use and 7% planning to eliminate them completely.

Azure spending to surge

The biggest beneficiary of this increased spending on cloud is likely be Azure. For 2021, 61% of organisations plan to increase their spending on the Microsoft Azure cloud, with 19% planning “significant” changes. 

This planned increase in spending is driven by the fact that Microsoft, with products that touch virtually every part of the IT stack, continues to make gains and hold the largest share of any vendor. Almost half (47%) of respondents report Microsoft is their top vendor by spend. Another 23% say it’s their second largest. The company has managed to maintain a successful on-premises business while also making major strides in the cloud space.

Other findings

The figures also show that survey respondents expect significant changes in IT spend across several technologies. Not surprisingly, spend for on-premises software, servers and data centres is dropping substantially, while spend for SaaS and public cloud is increasing. Organisations also expect to spend more on automation, AI/machine learning and containers. 

In addition, organisations are rethinking their staffing investments for 2021 due to the expectation that employees will continue to work from home. Investing in remote workers has moved to the top of the list of planned changes to IT staffing investments (up from sixth place last year). Investments in the upskilling and re-skilling of existing employees continue to be high priorities, moving down slightly to numbers two and three respectively. 

Azure Stack HCI now available

With the increasing spend in the cloud, 2021 promises to be a busy year ahead for Azure. It’s timely, therefore, that Microsoft has announced the general availability of Azure Stack HCI, a new subscription service for hyper-converged infrastructure (HCI).

Azure Stack HCI  is designed to let organisations deploy and run Windows and Linux virtual machines in their data centre or at the edge using their existing tools, processes and skillsets. Moreover, they can extend their data centre to the cloud with Azure Backup, Azure Monitor and Azure Security Center.

Customers can buy Azure Stack HCI from a certified hardware vendor. They can then run Azure Stack HCI on that hardware in their own data centres. There are currently more than 20 hardware partners with over 200 solutions, so it’s possible to choose the deployment scenario and hardware offering that works best for any particular environment.