Brought to you by The WHIR

The portion of enterprise IT budgets spent on hosting and cloud services in 2017 is set to jump by more than 20 percent over 2016, with nearly half going to bundled products, according to 451 Research’s study Voice of the Enterprise: Hosting and Cloud Managed Services.

The study shows a growing reliance on outsourced infrastructure, application, management, and security services driving enterprise spending on hosting and cloud from 28 to 34 percent of total IT budgets in the next year.

The report was compiled from a survey of  more than 580 IT professionals from around the world.

It found that less than one-third of that spending (31 percent) goes to infrastructure services, although as 451 Research points out, hosting and cloud providers often position themselves as infrastructure providers. Other types of services making up the remaining 69 percent of spend include application services (42 percent), managed services (14 percent), security services (9 percent), and “professional services for cloud enablement” (5 percent).

Nearly half of both infrastructure spending (44 percent) and application spending (49 percent) is for products bundled with managed or security services.

“The markets for unmanaged IaaS and SaaS are dominated by large, hyper-scale vendors. However, this spending trend indicates there is an appetite for the type of bundled services a broader market of managed service providers are well positioned to deliver. A strong opportunity exists for service providers offering a diversified set of hosting and cloud services that includes infrastructure and application hosting, as well as managed services and security services delivered around them,” Liam Eagle, Research Manager at 451 Research and lead author of the study said in a statement.

Public cloud infrastructure providers are the most common type of provider, used by 69 percent, while 26 percent of enterprises use managed hosting providers.

“The market for managed infrastructure and application services is a longer tail market, with greater opportunities for providers who emphasize expertise in operating, optimizing and securing the infrastructure and application products they deliver,” Eagle said. “This includes opportunities to deliver services based on reselling infrastructure and application services from the largest IaaS and SaaS vendors.”