Cost Optimization Emerges as Top Priority in Mature Cloud Market, ISG Study Reveals

In Mature Cloud Market, Cost Optimization is Top Enterprise Priority: ISG Study - Information Servs Gr (NASDAQ:III)

Survey of global cloud decision-makers finds more than 50 percent of applications now in the cloud, more than double the rate of 2022 With more than half of business-critical enterprise applications now in the cloud, new survey research from leading global technology research and advisory firm Information Services Group (ISG) III finds enterprises are even more focused on cost savings and leveraging the cloud for AI. The ISG Market Lens™ Cloud Managed Services Study interviewed 250 business leaders responsible for cloud decision-making worldwide about their cloud priorities, plans and performance, and found cloud maturity has doubled in the past two years. More than 50 percent of application categories are in the cloud in 2024, compared with 23 percent in 2022, and cost optimization has become a top strategic motivator for enterprise cloud services. Thirty-four percent of respondents to the 2024 study cite cost optimization of their cloud portfolio as a top priority, compared with 19 percent who said cost was a key driver of cloud adoption in 2022. Cloud services spending now accounts for 17 percent of IT budgets, the study found. "Cloud priorities have expanded since our 2022 cloud study, when flexibility and scalability were key priorities alongside cost," said Michael Dornan, principal analyst and co-author of the study. "Cost optimization is now a clear priority, as enterprises want to ensure that their spending is maximized for business success and accelerating investments in AI." Cloud services performance, security and data accessibility are also top enterprise cloud priorities and are the most common service-level agreements (SLAs) between enterprises and providers in their cloud provider ecosystem. Of those SLAs, 54 percent of enterprises rate security as very good or excellent, closely followed by service availability at 50 percent. In contrast, fewer than 20 percent of survey respondents rate their provider's cost management highly. Delivery against business value metrics, migration timelines and innovation also score poorly, suggesting that while enterprise technology needs are largely met, business needs are often not. Data from the second-quarter 2024 ISG Index™ found the number of AI-related projects increased about 60 percent in the trailing 12 months. AI projects now account for about 2.5 percent of revenue among the top 10 service providers. That share could rise to 5 or 10 percent over time as proofs-of-concept lead to projects that can scale. "AI is playing a growing role in cloud strategies, with 26 percent of survey respondents saying empowering cloud applications with AI capabilities is a top-three priority," said Alex Bakker, ISG Distinguished Analyst and co-author of the study. "In 2024, enterprises are focused on utilizing cloud-based AI modules and expanding cloud service provision to quickly leverage the benefits of AI. In the longer term, demand for AI is expected to drive growth in cloud spending across all categories, including private cloud." The ISG Market Lens Study also showed the proportion of survey respondents who say they have business applications they can "lift and shift" to the cloud has doubled since 2022 to 27 percent, while the proportion re-writing applications from scratch has fallen to 19 percent, reflecting previous application enhancements that prioritized future cloud migration. Fifty percent of respondents expect to move future applications to the cloud with minimal changes, leaving the architecture unchanged. "IT leaders and the business leaders they support often differ on their preferred approaches to cloud migration," Bakker said. "Business decision-makers want speed and are less likely to rewrite applications, but our study found 57 percent of IT decision-makers anticipate and prefer to rearchitect applications during migration. Our study suggests CIOs will need to persuade business leaders their preferred migration approach generates value for the bottom line." The ISG Market Lens Cloud Managed Services Study was conducted globally in globally in April and May 2024, and surveyed 250 executives with decision making responsibility for cloud business and technology strategy. ISG Market Lens buyer behavior studies combine findings from surveys of senior-level global executives with expert ISG research and analysis on market trends and strategic business initiatives. Past studies explored a range of topics, including business process outsourcing, digital sustainability, AI, application development and maintenance, cost optimization, cybersecurity, global capability centers, network modernization, banking and the future workplace. Contact ISG for more information on ISG Market Lens research. About ISG ISG (Information Services Group) III is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world's top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including AI and automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,600 digital-ready professionals operating in more than 20 countries -- a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry's most comprehensive marketplace data. For more information, visit www.isg-one.com. View source version on businesswire.com: https://www.businesswire.com/news/home/20240722455823/en/ Market News and Data brought to you by Benzinga APIs

In Mature Cloud Market, Cost Optimization is Top Enterprise Priority: ISG Study

Survey of global cloud decision-makers finds more than 50 percent of applications now in the cloud, more than double the rate of 2022 With more than half of business-critical enterprise applications now in the cloud, new survey research from leading global technology research and advisory firm Information Services Group (ISG) (Nasdaq: III) finds enterprises are even more focused on cost savings and leveraging the cloud for AI. The ISG Market Lens™ Cloud Managed Services Study interviewed 250 business leaders responsible for cloud decision-making worldwide about their cloud priorities, plans and performance, and found cloud maturity has doubled in the past two years. More than 50 percent of application categories are in the cloud in 2024, compared with 23 percent in 2022, and cost optimization has become a top strategic motivator for enterprise cloud services. Thirty-four percent of respondents to the 2024 study cite cost optimization of their cloud portfolio as a top priority, compared with 19 percent who said cost was a key driver of cloud adoption in 2022. Cloud services spending now accounts for 17 percent of IT budgets, the study found. "Cloud priorities have expanded since our 2022 cloud study, when flexibility and scalability were key priorities alongside cost," said Michael Dornan, principal analyst and co-author of the study. "Cost optimization is now a clear priority, as enterprises want to ensure that their spending is maximized for business success and accelerating investments in AI." Cloud services performance, security and data accessibility are also top enterprise cloud priorities and are the most common service-level agreements (SLAs) between enterprises and providers in their cloud provider ecosystem. Of those SLAs, 54 percent of enterprises rate security as very good or excellent, closely followed by service availability at 50 percent. In contrast, fewer than 20 percent of survey respondents rate their provider's cost management highly. Delivery against business value metrics, migration timelines and innovation also score poorly, suggesting that while enterprise technology needs are largely met, business needs are often not. Data from the second-quarter 2024 ISG Index™ found the number of AI-related projects increased about 60 percent in the trailing 12 months. AI projects now account for about 2.5 percent of revenue among the top 10 service providers. That share could rise to 5 or 10 percent over time as proofs-of-concept lead to projects that can scale. "AI is playing a growing role in cloud strategies, with 26 percent of survey respondents saying empowering cloud applications with AI capabilities is a top-three priority," said Alex Bakker, ISG Distinguished Analyst and co-author of the study. "In 2024, enterprises are focused on utilizing cloud-based AI modules and expanding cloud service provision to quickly leverage the benefits of AI. In the longer term, demand for AI is expected to drive growth in cloud spending across all categories, including private cloud." The ISG Market Lens Study also showed the proportion of survey respondents who say they have business applications they can "lift and shift" to the cloud has doubled since 2022 to 27 percent, while the proportion re-writing applications from scratch has fallen to 19 percent, reflecting previous application enhancements that prioritized future cloud migration. Fifty percent of respondents expect to move future applications to the cloud with minimal changes, leaving the architecture unchanged. "IT leaders and the business leaders they support often differ on their preferred approaches to cloud migration," Bakker said. "Business decision-makers want speed and are less likely to rewrite applications, but our study found 57 percent of IT decision-makers anticipate and prefer to rearchitect applications during migration. Our study suggests CIOs will need to persuade business leaders their preferred migration approach generates value for the bottom line." The ISG Market Lens Cloud Managed Services Study was conducted globally in globally in April and May 2024, and surveyed 250 executives with decision making responsibility for cloud business and technology strategy. ISG Market Lens buyer behavior studies combine findings from surveys of senior-level global executives with expert ISG research and analysis on market trends and strategic business initiatives. Past studies explored a range of topics, including business process outsourcing, digital sustainability, AI, application development and maintenance, cost optimization, cybersecurity, global capability centers, network modernization, banking and the future workplace. ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world's top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including AI and automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,600 digital-ready professionals operating in more than 20 countries -- a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry's most comprehensive marketplace data. For more information, visit www.isg-one.com.