Welcome to our “serverless” party: Gartner Predicts 1 in 5 businesses will own no IT assets by 2012

February 5, 2010 Appirio

Yamini Rangan

Gartner shocked many on-premise IT vendors recently by predicting that 20% of businesses will own no IT assets by 2012. We reached out to Leslie Fiering @ Gartner to swap notes– it was a fascinating conversation: Gartner’s prediction is based partly on the fact that cloud-based services and virtualization will become pervasive in the next few years. This does not mean the need for hardware will go away, it means the ownership of hardware will shift. It also means IT budgets will get re-allocated, IT personnel will need to get re-skilled and new IT buying points will emerge.

We agreed that most companies will go “serverless” before eventually becoming “hardwareless”– moving your IT infrastructure to the cloud makes it easier to think about things like desktop virtualization. Helping companies go serverless has been our focus at Appirio for a while: we predicted in 2008 that there would be a rise in 1000+ person companies going completely serverless. That’s how we run our own business– we have a cloud-based IT infrastructure that supported a doubling of our team last year.

Going serverless is closer to reality than most realize. Companies like Google and Amazon have invested heavily in creating some of the world’s most advanced data centers. Google, for example, is estimated to be among the top 5 whitebox server manufacturers globally – they are even working on data centers powered by wave farms! With these kinds of investments, innovation and scale, there’s no doubt that the vast majority of businesses will fall far behind with their own data centers. A number of companies have been intrigued enough by the benefits we’ve enjoyed as a serverless company to investigate the idea for themselves. We’re building business cases for several customers who want to “cloudsource” their entire IT infrastructure.

Its not really a question of IF businesses will become serverless, it is a question of WHEN. Today, if you are a start-up, there is no reason why you should buy servers, set up a datacenter or incur any type of capital expenditure in setting up your basic infrastructure. But for larger organizations, the question is how to build a business-case driven roadmap to get to that same end-state?

Our findings with early customers show that the benefits of moving to the cloud accelerate as more IT is moved to the cloud. Moving 100% of your IT infrastructure to the cloud creates 5-10x the benefits of just moving 50% of your infrastructure to the cloud. Entire categories of spend go away – no more VPN, Firewall, DMZ costs, no more rack space to build/rent, no more datacenter power and cooling costs. Gartner IT Spend and Staffing benchmarks (2009) indicate that a typical services organization spends 5.8% of their revenue on IT. Of that, nearly 18% of IT spend is on hardware. When you move 100% to the cloud, the hardware spend will drop practically to zero. Even after increased spend on cloud subscriptions, this frees up nearly 1% of your revenue for more strategic and innovative programs.

Also, going serverless makes you much more agile — not having to deal with difficult integrations and customizations of on-premise infrastructure makes it possible for IT to move quickly and meet the needs of the business. So, the benefits certainly don’t stop with cost savings — there are significant revenue and efficiency benefits from moving 100% to the cloud (stay tuned, we will explore these benefits in the coming weeks)

Interested in learning more about the business case for moving 100% to the cloud? Send us an email at cloud@appirio.com. Or if you have ideas for our next piece of art to show the evolution to a hardwareless state, let us know! You could even win one of our popular Appirio Dreamforce T-shirts.

Yamini joined Appirio to launch a new line of business around Cloudsourcing. She came to us from SAP’s Value Engineering team, and is working with our customers and prospects to build the business case for cloud computing.

Jamie Baines, a local San Francisco artist, created the sculpture you see here — server cages going from the backbone of the enterprise to the backbone of a prehistoric beast.

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