Results from the fourth annual Piper Jaffray CIO survey showed continued expectations for IT spending growth, with 65% of respondents (UP from 66% in 2014) indicating their IT budgets will increase more than 2% in 2015, while only 10% expected a decrease (from 18% in 2014).
Cloud budgets look up 6% year on year and on-premises spending up 2% year on year. Strategic projects like Enterprise Resource Planning (ERP) and infrastructure upgrades are top priorities, while apps continue to move to the cloud.
In last year’s survey, servers were identified as the one area within the datacenter most in need of a refresh. This year, 35% of CIOs cited networking as the area most in need of a refresh, up from 26% in 2014. This marks the third consecutive year networking has increased in the list of areas most in need of a refresh. Conversely, Storage continues to decline in the list, with just 12% of CIOs citing it as the area most in need of a refresh. We note that is down from 21% in the 2014 survey and 33% in the 2013 survey.
Hybrid cloud reigns supreme
CIOs remain concerned with the security in the public cloud as 35% of CIOs cited it as the primary reason for keeping data on premise. When asked about cloud spending, 73% of CIOs reported allocating budget to private, hybrid, or public cloud projects in 2015.
When asked about preferred software vendors for 2015, Microsoft came out on top with 24% of the 165 CIOs who answered this question citing Microsoft as their preferred primary provider. This result is not surprising given Microsoft’s long-standing leadership on the desktop, server and in the management infrastructure of key IT systems. Microsoft’s leadership bodes well for the company as well, since Gartner forecasts worldwide software IT spend to increase 7.4% in 2015, an acceleration from 6.9% in 2014.
Amazon on top, Google struggling
The preferred public cloud providers are unchanged from 2014: Amazon Web Services (AWS), Microsoft’s Azure, and Rackspace take the top 3 slots in this year’s survey. AWS leads with 35% of those CIOs who plan to use public cloud services citing them as the preferred vendor. This is up from 33% in 2014. Microsoft’s Azure and Rackspace maintained their second and third place rankings, garnering 21% and 16% of the votes, both up 1% year on year.
For Microsoft, the results suggest to us that demand for Azure is likely to continue into 2015. Increasing usage bodes well for premium Azure services, which were up 50% in the June 2014 quarter, and 60% in the September 2014 quarter.
The survey asked CIOs to indicate the magnitude of their planned spending on private cloud-related projects in 2015. Of the 38 respondents who expect to fund private cloud initiatives in 2015, 89% plan to increase spending vs. 2014. Amazon Web Services, Microsoft Azure, VMware vCloud Air, and Google are the beneficiaries of this additional spending, as greater than 50% of the CIOs in the survey indicated that they would increase spending with these vendors in 2015. In contrast, more than 50% of respondents indicated that Dell, Internap, Savvis, Pivotal, IBM Softlayer and HP would receive decreased funding in 2015.
Microsoft is still way ahead of Google but well behind Amazon Web Services (AWS). In the enterprise space Microsoft’s Cloud offering Azure could well be set to put real distance between itself and Google which is still trailing behind.
Microsoft has played a clever enterprise game. It ditched Steve Balmer at the right time and made a bold move in its choice of his successor. It has stemmed the tide of developers jumping ship to AWS and it is cleverly marketing its desktop roots and its reach into the data center.
Recent outages have been dealt with and detailed explanations have been forthcoming. So while it has a mountain to climb it is cctaking constant small incremental steps while the opposition is skipping some vital ones such as enterprise marketing. Google has marketed itself well to the mass market but Microsoft still has the legacy apps which the conservative IT world values.
Microsoft will also reap the rewards of migrating the Office suite to the web as Office 365, making the hunt for enterprise software that does not require training or support much more appealing.