CIOs and CTOs are exploring new ways to extract insights from their enterprise data assets with analytics tools. While they continue to invest in on-premises solutions, they're also looking to public cloud service providers.

As cloud computing providers grow their footprint in the Internet of Things (IoT) value chain, their investments in data and analytics services are accelerating.

Based on the review of cloud service provider offerings, recent acquisitions, and the competitive outlook, ABI Research now forecasts that cloud suppliers will grow their share of IoT data and analytics management revenues from $6 billion in 2019 to $56 billion in 2026.

IoT data and analytics market development

While the growth is impressive, cloud vendor services today are focused on data management complemented by a generic analytics toolset. That said, cloud computing vendor revenues come primarily from streaming, storage, and the orchestration of data.

In contrast, most analytics service offerings across cloud vendors are less differentiated, as reflected in pre-built templates — such as AWS Sagemaker and Microsoft Azure Notebooks — which leverage the Project Jupyter open-source software, standards and services initiative.

Considering that many cloud vendors are in the early stages of their analytics investment, they are relying on their specialized channel partners for addressing more specific 'advanced analytics' and vertical market needs.

"The overall approach shown by cloud suppliers in their analytics services reflects the dilemma they face in the complex IoT partnership ecosystem," says Kateryna Dubrova, analyst at ABI Research. "Effectively, do they rely on partners for analytics services, or do they build analytics services that compete with them?"

Interestingly, streaming is the one analytics technology that all cloud vendors are building into their solution portfolios to blend data management with near-real-time analytics on streamed IoT data.

Companies such as AWS, Microsoft, Google, IBM, and Oracle, for example, are promoting their proprietary streaming solutions to differentiate, accelerate time-to-market, and win over customers.

According to the ABI assessment, companies including Cloudera, Teradata, and C3.ai are introducing streaming analytics services that are reliant upon open-source technology, such as Spark and Flink.

However, by choosing to focus on data management and streaming technologies, cloud vendors are ceding the advanced analytics market to other suppliers. That emerging market is an example of the 'coopetition' in the IoT ecosystem, where cloud vendors partner with advanced analytics experts.

This vendor coopetition enables them to promote an end-to-end IoT technology stack. For example, Azure and AWS have partnered with Seeq to leverage its advance analytics capabilities. Other vendors, such as Oracle, Cisco, and Huawei, are pushing intelligence and analytics closer to the devices, expanding their edge computing portfolio.

Outlook for cloud-based analytics applications growth

Such divergent analytics strategies represent the reality and challenges for serving a very diverse IoT ecosystem with IoT analytics services.

"Ultimately, businesses are moving to an analytics-driven business model which will require both infrastructure and services for continuous intelligence. Cloud vendor strategies need to align with this reality to take advantage of analytics value and revenues that will transition to predictive and prescriptive solutions," Dubrova concludes.

There is a significant upside opportunity for vendors that are exploring the numerous applications for IoT analytics services. Solutions will include both on-premises IT infrastructure and cloud offerings.

Interested in hearing industry leaders discuss subjects like this and sharing their experiences and use-cases? Attend the Cyber Security & Cloud Expo World Series with upcoming events in Silicon Valley, London and Amsterdam to learn more.

Hyperscale cloud providers are experiencing some market saturation. Vendor revenue from IT infrastructure products (server, enterprise storage, and Ethernet switch) for cloud environments, including public and private cloud, declined in the third quarter of 2019 (3Q19) as the overall IT infrastructure market continues to experience weakening sales following strong growth in 2018.

The decline of 1.8 percent year-over-year was much softer than in 2Q19 as the overall spend on IT infrastructure for cloud environments reached $16.8 billion, according to the latest market study by International Data Corporation (IDC).

As a result, IDC chose to slightly increase its forecast for total spending on cloud IT infrastructure in 2019 to $65.4 billion. This represents a flat performance compared to 2018.

Cloud IT infrastructure market development 

The decline in cloud IT infrastructure spending was driven by the public cloud segment, which was down 3.7 percent year over year, reaching $11.9 billion; sequentially from 2Q19, this represents a 24.4 percent increase.

As the overall segment is generally trending up, it tends to be more volatile quarterly as a significant part of the public cloud IT segment is represented by a few hyperscale service providers. This softness of the public cloud IT segment is aligned with IDC's expectation of a slowdown in this segment in 2019 after a strong performance in 2018.

It is expected to reach $44 billion in sales for the full year 2019, a decline of 3.3 percent from 2018. Despite softness, public cloud continues to account for most of the spending on cloud IT environments.

However, as demand for private cloud IT infrastructure is increasing, the share of public cloud IT infrastructure continued to decline in 2019 and will be declining slightly throughout the forecast period.

Spending on private cloud IT infrastructure has shown more stable growth since IDC started tracking sales of IT infrastructure products in various deployment environments. In 3Q19, vendor revenues from private cloud environments increased 3.2 percent year-over-year, reaching nearly $5 billion. IDC expects spending in this segment to grow 7.2 percent year over year in 2019 to $21.4 billion.

As investments in cloud IT infrastructure continue to increase, with some swings up and down in the quarterly intervals, the IT infrastructure industry is approaching the point where spending on cloud IT infrastructure consistently surpasses spending on non-cloud IT infrastructure.

Until 3Q19, it happened only once, in 3Q18, and in 3Q19 it crossed the 50 percent mark for the second time since IDC started tracking IT infrastructure deployments. In 3Q19, cloud IT environments accounted for 53.4 percent of vendor revenues.

However, for the full year 2019, spending on cloud IT infrastructure is expected to stay just below the 50 percent mark at 49.8 percent. This year (2020) is expected to become the tipping point with spending on cloud IT infrastructure staying in the 50+ percent range.

Across the three IT infrastructure domains, Ethernet switches is the only segment expected to deliver visible year-over-year growth in 2019, up 11.2 percent, while spending on compute platforms will decline 3.1 percent and spending on storage will grow just 0.8 percent. Compute will remain the largest category of cloud IT infrastructure spending at $34.1 billion.

Sales of IT infrastructure products into traditional (non-cloud) IT environments declined 7.7 percent from a year ago in 3Q19. For the full year 2019, worldwide spending on traditional non-cloud IT infrastructure is expected to decline by 5.3 percent.

By 2023, IDC expects that traditional non-cloud IT infrastructure will only represent 41.9 percent of total worldwide IT infrastructure spending (down from 51.6 percent in 2018). This share loss and the growing share of cloud environments in overall spending on IT infrastructure is common across all regions.

According to the IDC assessment, while the industry overall is moving toward greater use of cloud, there are certain types of workloads and business practices, and sometimes end user inertia, which keep demand for traditional dedicated IT infrastructure afloat.

Outlook for cloud infrastructure investment growth

Geographically, the cloud IT Infrastructure segment had a mixed performance in 3Q19. Declines in the U.S. market, Western Europe, and Latin America were driven by overall market weakness; in these and some other regions 3Q19 softness in cloud IT infrastructure spending was also affected by comparisons to a strong 3Q18.

In Asia-Pacific (excluding Japan), the second-largest geography after the U.S. market, spending on cloud IT infrastructure increased 1.2 percent year-over-year, which is low for this region. However, it is in comparison with strong double-digit growth in 2018. Other growing regions in 3Q19 included Canada (4.9 percent), Central & Eastern Europe (4.6 percent), and Middle East & Africa (18.1 percent).

Long-term, IDC expects spending on cloud IT infrastructure to grow at a five-year compound annual growth rate (CAGR) of 7 percent, reaching $92 billion in 2023 and accounting for 58.1 percent of total IT infrastructure spend. Public cloud datacenters will account for 66.3 percent of this amount, growing at a 6 percent CAGR. Spending on private cloud infrastructure will grow at a CAGR of 9.2 percent.

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The evolution of information technology (IT) leadership – sometimes driven by the line of business (LoB), sometimes by the legacy IT organisation – is reaching a state of balance where business-IT collaboration sets the stage for meaningful digital transformation.

Software application leaders must examine these predictions to learn how this equilibrium will take shape in their organisation. Over the next two years, ~50 percent of organisations will experience increased collaboration between their business and IT teams, according to the latest worldwide market study by Gartner.

Gartner believes that the dispute between LoB leaders and traditional CIOs or CTOs over the control of enterprise technology deployment will lessen, as both sides learn that joint participation in the process is critical to the success of innovation within a digital workplace.

Application leadership market development

"Business units and IT teams can no longer function in silos, as distant teams can cause chaos," said Keith Mann, senior research director at Gartner. "Traditionally, each business unit has had its own technology personnel, which has made businesses reluctant to follow the directive of central IT teams."

Increasingly, however, savvy organisations now understand that a unified objective is essential to ensure the integrity and stability of core business. As a result, individuals stay aligned with a common goal, work more collaboratively and implement new business technologies effectively.

The role of 'application leader' has changed significantly with the replacement of manual tasks by cloud-based applications in digital workplaces. According to the Gartner assessment, the application leader must ensure that this transition is supported by appropriate skills and talent.

As more and more organisations opt for cloud-based applications, artificial intelligence (AI) techniques such as machine learning, natural language processing, chatbots and virtual assistants are emerging as digital integrator technologies.

"While the choice of integration technologies continues to expand, the ability to use designed applications and data structures in an integrated manner remains a complex and growing challenge for businesses. In such scenarios, application leaders need to deliver the role of integration specialists in order to ensure that projects are completed faster and at a lower cost," said Mann.

Outlook for application development collaboration

Enterprise application leaders will have to replace the command-and-control model with versatility, diversity and team engagement with key stakeholders. Application leaders must become more people-centric and provide critical support to digital transformation initiatives.

Additionally, in a digital workplace, it is the application leader’s responsibility to serve as the organisational 'nerve centre' by quickly sensing, responding to, and provisioning applications or IT infrastructure.

"Application leaders will bring together business units and central IT teams to form the overall digital business team," said Mann.  That said, in this environment, the successful IT vendors will learn to adapt to this procurement transition – where a variety of buyers and influencers drive the discovery, consideration and ultimate solution selection process.

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In many organisations today, IT is more than a utility: it has become an essential platform for their ongoing business development. Therefore, they crave a superior IT experience for their employees and other key stakeholders. For most, cloud computing is a fundamental ingredient of the digital transformation agenda.

The common commercial use cases for public cloud services have already been exploited by many organisations. Front-office applications, such as customer relationship management, online commerce, and numerous consumer-facing apps, constitute the bulk of the workloads that reside on cloud service provider shared infrastructure.

These initial use cases have validated the proven benefits of cloud computing architectures that are appealing to software developers – including speed of deployment, dynamic resource acquisition, application elasticity, and service reuse across workloads.

Leveraging the inherent benefits of cloud service offerings, organisations are now focused on the potential of utilising IT infrastructure for innovation, process improvement, streamlined operations, entering new markets, and the creation of a preemptive response to potential disruption by new tech startups.

According to the latest worldwide market study by the IBM Institute for Business Value (IBV), organisations report success with public cloud initiatives, especially those forward-looking business transformation projects related to digital growth.

Meanwhile, mission-critical, security-dependent applications — such as customer databases, transaction processing, finance and accounting, supply chain, and manufacturing — are somewhat less likely to reside on a public cloud service provider’s platform.

This is particularly true for highly regulated industries, such as financial services and healthcare, where the greatest proportion of their online business processes have yet to move to a cloud service delivery model.

In many cases, these computing and storage workloads are better suited to the private cloud — or a mixture of public, private, and non-cloud traditional IT infrastructure.

In order for the next phase of cloud computing benefits to be realised, an open and adaptable approach to IT infrastructure architecture is required to address the multitude of use cases.

The evolution of cloud services adoption

The hybrid IT model permits public clouds, private clouds, and on-premises non-cloud IT infrastructure to connect across all three standardised technology interfaces: Linux OS, Open Container Initiative, and Kubernetes. These technologies enable developers to innovate with scale and agility, improving responsiveness and constraining cost, despite growing complexity.

Hybrid IT enables workloads to be deployed on the optimal compute and storage environment.

• Public clouds are well suited for many front-office workloads.
• Private clouds are well suited for many of the mission-critical workloads where the benefits of cloud are desirable — but the security and assurance of a private environment are preferred.
• And traditional IT environments are suited for workloads that don’t inherently take advantage of cloud benefits — and demand the dedication of computing resources.

According to the IBM IBV assessment, as hybrid cloud solutions become widespread, there will be more variations of cloud service adoption across all industries. However, in the more regulated industries, the cloud service mix will tilt toward private cloud adoption, rather than public cloud. In the less regulated industries, the cloud service mix will likely tilt the other way.

In all cases, there’s a universal need to interoperate between public, private and traditional IT.

Hybrid cloud’s intrinsic interoperability and portability can mean that organisations are less likely to become locked in to a proprietary environment or to one particular public cloud service provider. Savvy CIOs and CTOs will choose to place their workloads on the best-fit platform and maintain interoperability between IT environments and between different public cloud service providers.

Why freedom to choose matters

Hybrid cloud can also help to address security concerns and other potential barriers to an otherwise successful cloud service deployment. The IBM IBV research study findings indicate that IT security and governance are the two top reasons cited as justification to keep enterprise workloads on-premises.

Armed with hybrid cloud solutions, organisations can run applications and store data in the specific IT environments best aligned with security, regulatory, and governance requirements.

Hybrid cloud also allows enterprises to manage their cloud transition dynamically, selecting acceptable levels of downtime and overcoming the possibility of operational constraints.

The next chapter in the evolving cloud computing story is about gaining access to enhanced capabilities – in particular, the cloud-enablement of complex mission-critical software apps.

The IBM IBV outlined key steps toward the hybrid cloud model:

Architect the destination: Think open, multi-cloud, hybrid cloud. Your organisation will live with the decisions you make today for years. Think through which of your workloads fit best in the public cloud, private cloud, and traditional IT environments. Avoid both environment lock-in (to only one of the three) and vendor lock-in, and reassess approaches that might not survive as standards and technologies evolve.

Sequence the journey: Avoid “ready, fire, aim” approaches. Layout a careful, clear roadmap of what you want to do and in what order. You may experience pressure to skip ahead without building a solid, open foundation. Resist it.

Mobilise the right skills and assets: Draw upon talent within and outside your enterprise. It’s important to develop and maintain in-house skills, but working with trusted third-party services providers, enabled by greater interoperability, can help bridge short-term gaps while reducing fixed costs.

Manage to create clear outcomes: Establish meaningful qualitative and quantitative measurements and be tenacious in holding to them. Remain flexible and incorporate new technologies as they emerge. Always stay true to your business, architectural, and technical principles.

The hybrid IT strategy questions to ask include:

• To what extent do your people understand the implications and opportunities of next-generation cloud on your business and your competitive environment?
• How is your organisation, and your competition, taking advantage of hybrid cloud, particularly data and processes that, until recently, have been difficult to move?
• What adjustments have you made in hiring and training to have the right people at the right time working on the right things in dynamic ecosystems powered by hybrid cloud?

The quest for hybrid IT nirvana

In summary, organisations will continue to seek the essential benefits of a hybrid model because it offers them the freedom of choice that forward-thinking CIOs and CTOs require. Put simply, they’ll need the flexibility and agility of a Hybrid IT environment to achieve their bold goals for digital transformation.

From the C-suite perspective, this quest isn’t about technology. Rather, it’s about applied IT enabling strategic business outcomes. The goal: deliver a unified experience across platforms that abstracts the underlying IT infrastructure. The ‘everything-as-a-service’ platform accelerates the achievement of commercial objectives. It also reduces the risk of cyber threats by assuring digital trust.

Interested in hearing industry leaders discuss subjects like this and sharing their experiences and use-cases? Attend the Cyber Security & Cloud Expo World Series with upcoming events in Silicon Valley, London and Amsterdam to learn more.

Now that data breaches are more common, 'digital trust' is a top priority for C-level leaders that build and maintain the IT infrastructure for digital transformation. Besides, for most organisations, losing digital trust can have a significant impact on brand reputation and the bottom line.

Artificial intelligence (AI) and machine learning (ML) have been adopted for their automation benefits, from predictive outcomes to advanced data analytics. AI-based cybersecurity can augment the capabilities of IT staff and help organisations deflect cyber threats, according to the latest market study by Frost & Sullivan.

AI and ML market development

Particularly, AI and ML have been used widely in cybersecurity industries, by both hacking and security communities, making the security landscape even more sophisticated. Many organisations, regardless of size, are now facing greater challenges in day-to-day IT security operations.

Many of them indicate that the cost of threat management, particularly threat detection and response, is too high. Meanwhile, AI-driven attacks have increased in number and frequency, requiring security professionals to have more advanced, smart and automated technologies to combat these automated attacks.

With digital transformation a priority for a majority of enterprises today, there is a proliferation of connected devices, offering customers convenience, efficient services and better experiences. However, this connectivity also increases the potential risk of cyberattacks for enterprises and users.

Cybercriminals are also using more sophisticated methods to attack organisations. These include polymorphic malware, AI and other automated techniques. Enterprises are struggling with a lack of trained staff and cybersecurity expertise to counter the more sophisticated attacks.

These increasing challenges in security operations suggest the need for a smarter, more adaptable, automated and predictive security strategy. AI and ML are increasingly being developed by security companies to strengthen their competitiveness using their own AI or ML algorithms to empower security products and augment the capabilities of existing IT and cybersecurity staff in enterprises.

AI and ML are being incorporated into all stages of cybersecurity to enable enterprises to adopt a smarter, more proactive and automated approach toward cyber defense, including threat prevention or protection, threat detection or hunting, and threat response to predictive security strategies.

While technology startups have been the most proactive in introducing multiple AI-enabled security offerings into the market, larger IT vendors have also incorporated AI and ML into their existing enterprise security solutions.

Outlook for AI and ML applications growth

"With cybersecurity solutions powered by AI capabilities, vendors can better support enterprises and their cybersecurity teams with less time and manpower investment and higher efficiency to identify the cybersecurity gaps," said Amy Lin, industry analyst at Frost & Sullivan.

Key AI and ML market trends for cybersecurity include:

• Embracing and incorporating AI-enabled capabilities into exiting solutions to intensify the competitive advantage
• Supporting a more holistic cybersecurity framework from detection to response and further prediction
• Assisting cybersecurity expert teams on operations with lower false-positive rates and enhancing their ability to react

Interested in hearing industry leaders discuss subjects like this and sharing their experiences and use-cases? Attend the Cyber Security & Cloud Expo World Series with upcoming events in Silicon Valley, London and Amsterdam to learn more.

The initial commercial interest in cryptocurrency IT infrastructure was the potential to enable an alternative to government-backed fiat currencies. However, now most of the forward-looking focus is on blockchain, the distributed ledger technology that underpins the new applications.

Although deployments are still very much in the realm of the early adopter, blockchain has proven advantages across several vertical industries: it is safe, decentralised, transparent and can reduce intermediary costs.

Blockchain use case market development

While many CIOs and CTOs believe that blockchain likely has a way to go before becoming a mainstream technology within their sector, five compelling use cases across asset tracking, financial services and digital identity are already in production.

They offer valuable business process improvements to the pioneering organisation that has already deployed a blockchain — whether in terms of increased efficiency, reduced fees and fraud, or full transparency across the whole network.

According to the latest worldwide market study by Juniper Research, the total value of B2B cross-border payments immutably stored on a blockchain will exceed $4.4 trillion by 2024 — that's up from $171 billion in 2019.

Blockchain enables real-time clearing and settlement for B2B transactions, while offering increased transparency and reduced costs. These practical applications can deliver significant other benefits.

The new research revealed that financial institutions will save $7 billion by 2024, due to the automation of ‘Know Your Customer’ checks, allied to the involvement of blockchain in identifying users via self-sovereign identity.

Juniper Research assessed 15 leading blockchain vendors, scoring them on experience in the sector, marketing efforts and customer deployments along with their blockchain solutions. Juniper identified the 5 leading vendors as follows: IBM, Infosys Finacle, Guardtime, R3 and Ripple.

The analyst research scored IBM highly for its diverse blockchain solutions in production, with a strong client base for many vertical industries. Additionally, Infosys Finacle has established itself as a leading blockchain provider for financial institutions, with global partners and popular solutions.

"The implementation of blockchain is part of a wider strategy for financial institutions to digitally transform operations," said Dr Morgane Kimmich, research analyst at Juniper Research. "Blockchain will enable stakeholders to reduce operational costs in a competitive market that is becoming increasingly commoditised."

The research found that Ripple, Visa and IBM are driving blockchain innovation in cross-border payments. Ripple has led the market since 2012, capitalising on its early mover advantage to grow to over 200 financial institution partners in 2019.

Outlook for blockchain applications innovation

However, Ripple is facing increased competition from Visa B2B Connect and IBM Blockchain World Wire, which have already grown their presence in 60 countries and have high-profile partners in the financial services ecosystem.

Moreover, the Juniper analyst anticipates that both companies will continue to exploit their global presence, trusted brand names and established business partner networks to scale their solutions. These market leaders are experienced in market development, moving new product and service offerings beyond the early adopter segment. More deployment growth is sure to follow their lead.

Interested in hearing more in person? Find out more at the Blockchain Expo World Series, Global, Europe and North America. 

Demand for computer servers, disk storage systems, and networking hardware deployed within an enterprise hybrid cloud environment remains strong. Moreover, the investment in non-cloud on-premises infrastructure seems assured by the CIO and CTO need to deliver superior security and compliance with IT regulatory requirements in several key industries.

According to the latest worldwide market study by International Data Corporation (IDC), vendor revenue from sales of IT infrastructure products for cloud environments — including public and private cloud — declined 10.2 percent year-over-year in the second quarter of 2019 (2Q19), reaching $14.1 billion.

Cloud IT infrastructure market development

IDC also lowered its forecast for total spending on cloud IT infrastructure in 2019 to $63.6 billion, down 4.9 percent from last quarter's forecast and changing from expected growth to a year-over-year decline of 2.1 percent.

Vendor revenue from hardware infrastructure sales to public cloud environments in 2Q19 was down 0.9 percent compared to the previous quarter (1Q19) and down 15.1 percent year over year to $9.4 billion.

This segment of the market continues to be highly impacted by demand from a handful of hyperscale cloud service providers, whose spending on IT infrastructure tends to have significant upward and downward swings. That ongoing fluctuation creates volatility for the IT infrastructure vendors.

After a strong performance in 2018, IDC expects the public cloud IT infrastructure segment to cool down in 2019 with spending reaching $42 billion — that's a 6.7 percent decrease from 2018. Although it will continue to account for most of the spending on cloud IT environments, its share will decrease from 69.4 percent in 2018 to 66.1 percent in 2019.

In contrast, spending on private cloud IT infrastructure has shown more stable growth since IDC started tracking sales of IT infrastructure products in various deployment environments. In the second quarter of 2019, vendor revenues from private cloud environments increased 1.5 percent year-over-year reaching $4.6 billion. IDC expects spending in this segment to grow 8.4 percent year-over-year in 2019.

Overall, the IT infrastructure industry is at crossroads in terms of product sales to cloud vs. traditional IT environments. In 3Q18, vendor revenues from cloud IT environments climbed over the 50 percent mark for the first time but fell below this important tipping point since then.

In 2Q19, cloud IT environments accounted for 48.4 percent of vendor revenues. For the full year 2019, spending on cloud IT infrastructure will remain just below the 50 percent mark at 49 percent.

Longer-term, however, IDC expects that spending on cloud IT infrastructure will grow steadily and will sustainably exceed the level of spending on traditional IT infrastructure in 2020 and beyond.

Spending on the three technology segments in cloud IT environments is forecast to deliver growth for Ethernet switches while computing platforms and storage platforms are expected to decline in 2019.

Ethernet switches are expected to grow at 13.1 percent, while spending on storage platforms will decline at 6.8 percent and compute platforms will decline by 2.4 percent. Compute will remain the largest category of spending on cloud IT infrastructure at $33.8 billion.

Sales of IT infrastructure products into traditional (non-cloud) IT environments declined 6.6 percent from a year ago in Q219. For the full year 2019, worldwide spending on traditional non-cloud IT infrastructure is expected to decline by 5.8 percent, as the technology refresh cycle driving market growth in 2018 is winding down this year.

By 2023, IDC expects that traditional non-cloud IT infrastructure will only represent 41.8 percent of total worldwide IT infrastructure spending — that's down from 52 percent in 2018. This share loss and the growing share of cloud environments in overall spending on IT infrastructure is common across all regions.

Most regions grew their cloud IT Infrastructure revenues in 2Q19. Middle East & Africa was fastest growing at 29.3 percent year-over-year, followed by Canada at 15.6 percent year-over-year growth. Other growing regions in 2Q19 included Central & Eastern Europe (6.5 percent), Japan (5.9 percent), and Western Europe (3.1 percent).

Cloud IT infrastructure revenues were down slightly year-over-year in Asia-Pacific (excluding Japan) (APeJ) by 7.7 percent, Latin America by 14.2 percent, China by 6.9 percent, and the USA by 16.3 percent.

Outlook for cloud IT infrastructure investment

Long-term, IDC expects spending on cloud IT infrastructure to grow at a five-year compound annual growth rate (CAGR) of 6.9 percent, reaching $90.9 billion in 2023 and accounting for 58.2 percent of total IT infrastructure spend.

Public cloud data centres will account for 66 percent of this amount, growing at a 5.9 percent CAGR. Spending on private cloud infrastructure will grow at a CAGR of 9.2 percent.

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Preparing for the adoption of new technologies is challenging for many large enterprise organisations. That's why savvy CIOs and CTOs seek information and guidance from vendors that can assist them on the journey to achieve digital business transformation. Meanwhile, investment in artificial intelligence (AI) systems and services will continue on a high-growth trajectory.

According to the latest worldwide market study by International Data Corporation (IDC), spending on AI systems will reach $97.9 billion in 2023 – that's more than two and a half times the $37.5 billion that will be spent in 2019. The compound annual growth rate (CAGR) for AI in the 2018-2023 forecast period will be 28.4 percent.

Artificial intelligence market development

"The AI market continues to grow at a steady rate in 2019 and we expect this momentum to carry forward," said David Schubmehl, research director at IDC. "The use of artificial intelligence and machine learning (ML) is occurring in a wide range of solutions and applications from ERP and manufacturing software to content management, collaboration, and user productivity."

Artificial intelligence and machine learning are top of mind for most organisations today, and IDC expects that AI will be the disrupting influence changing entire industries over the next decade.

Spending on AI systems will be led by the retail and banking industries, each of which will invest more than $5 billion in 2019. Nearly half of the retail spending will go toward automated customer service agents and expert shopping advisors & product recommendation systems. The banking industry will focus its investments on automated threat intelligence and prevention systems and fraud analysis and investigation.

Other industries that will make significant investments in AI systems throughout the forecast include discrete manufacturing, process manufacturing, healthcare, and professional services. The fastest spending growth will come from the media industry and federal or central governments with five-year CAGRs of 33.7 percent and 33.6 percent respectively.

Investments in AI systems continue to be driven by a wide range of use cases. The three largest use cases — automated customer service agents, automated threat intelligence and prevention systems, and sales process recommendation and automation — will deliver 25 percent of all spending in 2019. The next six use cases will provide an additional 35 percent of overall spending this year.

The use cases that will see the fastest spending growth over the 2018-2023 forecast period are automated human resources (43.3 percent CAGR) and pharmaceutical research and development (36.7 percent CAGR). However, eight other use cases will have spending growth with five-year CAGRs greater than 30 percent.

Decision-makers across all industries are now grappling with the question of how to effectively proceed with their AI journey.  That's why the largest share of technology spending in 2019 will go toward services, primarily IT services, as firms seek outside expertise to design and implement their AI projects.

Hardware spending will be somewhat larger than software spending in 2019 as firms build out their AI infrastructure, but purchases of AI software and AI software platforms will overtake hardware by the end of the forecast period with software spending seeing a 36.7 percent CAGR.

Outlook for AI applications development growth

On a geographic basis, the United States will deliver more than 50 percent of all AI applications development spending throughout the forecast period, led by the retail and banking industries. Western Europe will be the second-largest geographic region, led by banking and discrete manufacturing.

China will be the third-largest region for AI spending with retail, state or local government, and professional services vying for the top position. The strongest spending growth over the five-year forecast period will be in Japan (45.3 percent CAGR) and China (44.9 percent CAGR).

Interested in hearing industry leaders discuss subjects like this and sharing their experiences and use-cases? Attend the Cyber Security & Cloud Expo World Series with upcoming events in Silicon Valley, London and Amsterdam to learn more.

The pace of cloud computing adoption will accelerate as more organizations explore hybrid IT strategies. CIOs and CTOs will fine-tune the mix of on-premises and managed cloud services for their user's varied applications and workloads.

Worldwide spending on public cloud services and infrastructure will more than double over the 2019-2023 forecast period, according to the latest market study by International Data Corporation (IDC).

With a five-year compound annual growth rate (CAGR) of 22.3 percent, public cloud spending is forecast to grow from $229 billion in 2019 to reach nearly $500 billion in 2023.

Public cloud service market development

"Adoption of public (shared) cloud services continues to grow rapidly as enterprises, especially in professional services, telecommunications, and retail, continue to shift from traditional application software to software as a service (SaaS) and from traditional infrastructure to infrastructure as a service (IaaS) to empower customer experience and operational-led digital transformation initiatives," said Eileen Smith, program director at IDC.

SaaS will remain the largest category of cloud computing, capturing more than half of all public cloud spending in throughout the forecast period. SaaS spending, which is comprised of applications and system infrastructure software (SIS), will be dominated by applications purchases.

The leading SaaS applications will be customer relationship management (CRM) and enterprise resource management (ERM). SIS spending will be led by purchases of security software and system and service management software.

Infrastructure as a service (IaaS) will be the second largest category of public cloud spending. IaaS spending, comprised of servers and storage devices, will also be the fastest growing category of cloud spending with a five-year CAGR of 32 percent.

Platform as a service (PaaS) spending will grow nearly as fast (29.9 percent CAGR) led by purchases of data management software, application platforms, and integration and orchestration middleware.

Three industries – professional services, discrete manufacturing, and banking – will account for more than one-third of all public cloud services spending throughout the forecast period. While SaaS will be the leading category of investment for all industries, IaaS will see its share of spending increase significantly for industries that are building data and compute-intensive services.

For example, IaaS spending will represent more than 40 percent of public cloud services spending by the professional services industry in 2023 compared to less than 30 percent for most other industries. Professional services will also see the fastest growth in public cloud spending with a five-year CAGR of 25.6 percent.

On a geographic basis, the United States will remain the largest public cloud services market, accounting for more than half the worldwide total through 2023. Western Europe will be the second largest market with nearly 20 percent of the worldwide total.

China will experience the fastest growth in public cloud services spending over the five-year forecast period with a 49.1 percent CAGR. Latin America will also deliver strong public cloud spending growth with a 38.3 percent CAGR.

Outlook for cloud service applications growth

Very large businesses will account for more than half of all public cloud spending throughout the forecast period, while medium-sized businesses will deliver around 16 percent of the worldwide total.

Small businesses will trail large businesses by a few percentage points while the spending share from small offices will be in the low single digits.

Moreover, all the company size categories – except for very large businesses – will experience spending growth greater than the overall market.

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Managing big data apps is a challenge for many IT organisations. Moreover, chief data officers (CDOs) and their data and analytics (DA) teams are not achieving the best balance required to deliver superior performance, according to the latest market study by Gartner.

"CDOs are generally focused upon the right things, but they do not have the right mix of activities," said Debra Logan, vice president at Gartner.

Data and analytics market development

The Gartner survey found that while the creation of a data-driven culture was ranked the number one critical factor to the DA team, there were conflicting rankings for technical and nontechnical activities (data integration and data skills training), and strategic and tactical activities (enterprise information management [EIM] program and architecting a DA platform).

While the implementation of a DA strategy was ranked the number three most-critical success factor by 28% of CDOs, another strategic activity – creating a data literacy program – was ranked only 12th.

This was despite the fact that, in the same survey, ‘poor data literacy’ was rated the number one roadblock to creating a data-driven culture and realising its business benefits.

"The low ranking of strategic activities can be explained because the majority of organisations are at maturity level 3 or higher for EIM and business intelligence and analytics," said Logan.

While the survey shows that information governance is important, especially master data management (MDM), CDOs should never lose sight of the business outcomes they are trying to achieve. Focusing exclusively on governance, even MDM, is not enough to succeed as a CDO.

A majority of CDO respondents rated machine learning (ML) and artificial intelligence (AI) as critical at 76% and 67%, respectively. 65% of respondents were using or piloting ML, while 53% were using or piloting AI.

However, a relatively small percentage of CDOs that were surveyed are already using or piloting smart contracts (18%) or blockchain (16%).

In terms of measuring the value of their organisation’s information and data assets, only 8% of CDOs were measuring the financial value of DA.

45% of CDOs reported they produce some data quality metrics – such as accuracy, completeness, scale and usage – while 29% said they measure the impact of key information and data assets on business processes, such as KPIs.

The Gartner survey also found that the majority of CDOs generated value from information assets to improve internal processes (60%) and increase the value of products and services (57 percent), with a focus on efficiency.

Outlook for DA applications innovation

Half of CDOs reported a focus on enhancing new offerings by innovating with information. Other means to realise value from information assets also lagged. 19% of CDO respondents were selling or licensing information via data brokers or online marketplaces and only 17% were selling or licensing to others for cash.

Overall, respondents using information and data assets to generate indirect economic benefits were more likely to report superior organisational performance when engaged in improving or developing new offerings, in increasing the value of their products or services, and in exchanging information with business partners for goods, services or favourable contract terms.

Interested in hearing industry leaders discuss subjects like this and sharing their experiences and use-cases? Attend the Cyber Security & Cloud Expo World Series with upcoming events in Silicon Valley, London and Amsterdam to learn more.