Software Asset Management and Licensing app provider Flexera recently published a report on technology investments that makes fascinating, scary or reassuring reading depending upon your perspective.
The Flexera™ State of Technology Spend Report was based on over 300 interviews with enterprise IT executives. Minimum enterprise employee size was 2,000, 62% of surveys were in the US, 36% in Europe. So clearly there is some geographic bias and no representation of the views of Asia Pacific enterprises. However, the research outcomes do pass a cognitive test of analysis (without access to the data). Enterprises spend approximately 8% of revenue on IT, and the trajectory is one of growth with enterprises overwhelmingly looking to spend more on technology.
There is a lot to unpick in the document, more than a single blog post could do justice.
Cloud usage is accelerating across customer size, and workload, with PaaS, SaaS, IaaS all experiencing strong growth at the expense of on-premise. Some of the numbers of cloud adoption may seem a little hotter than the market, but not exponentially so.
The overall state of IT in the organisation is healthy, with the key focus areas being Digital Transformation, Cyber Security and the cloud. Again, no surprise here, these will be a top 3, alongside enterprise resilience for a while to come.
For me, the most interest in the report came from the perspective of investment with various enterprise platforms. The relative health of legacy and cloud providers is highlighted in the figure below. If you are a cloud-native or Microsoft, it is excellent reading. If you are a legacy IT provider, it is a challenging read.
The split in the market to AWS, ServiceNow, Salesforce, Google, Workday and Microsoft vs the rest is clear and distinct, but this research reinforces the shift. Not only are enterprises spending more with cloud providers, but there is a net decline for IBM and Oracle. Red Hat is more positive, but clearly, nowhere near enough to compensate for the overall decrease in IBM investment predicted by the research. For IBM and Oracle, who have always been Enterprise reliant, this is a significantly challenging outcome.
On the positive side, the research highlights that AWS, ServiceNow, Salesforce, Google, Workday and Microsoft, in particular, can be very bullish in their revenue growth. These vendors also cover a significant range of Enterprise IT requirements, particularly in innovation-driven markets such as Customer Experience, AI, and process automation. Of course, they are also 100% Cloud Based.
SAP fare better than expected; it highlights the pressure on Oracle, as well as the positive outcomes of their considerable efforts to be available, ready and waiting on Google, AWS and Microsoft Azure. Oracle has primarily taken a different approach seeking to protect its database business.
Everyone who pays even cursory attention to the tech machinations understands the old vendors are increasingly disrupted, and only a small few have made the leap to leadership, Microsoft at the top of that list. AWS, Salesforce, Google, ServiceNow all are leading for the enterprise from the perspective of anticipated investments. They are the future for the enterprise and also for many smaller organisations. The legacies are running out of time to break this down.