News & Analysis

Hardware Remains Top  IT Spend Despite Cloud Rush: Study

The current and future state of hardware technology will continue to evolve to ultimately integrate with cloud technology in an increasingly hybrid world.

Spiceworks Ziff Davis (SWZD) published its new Hardware Trends in 2022 and Beyond report, offering insights into the state of server and client computing devices. Although many have rushed to the cloud to support a new remote workforce, hardware remains the top IT spend category. SWZD’s findings show that physical servers will continue to evolve to ultimately co-exist and integrate with public clouds, allowing for greater portability and flexibility that will benefit organizations in an increasingly hybrid world.

To facilitate a holistic view of the current and future state of hardware tech, SWZD combined historical IT spend and adoption data with their 2022 State of IT research focused on hardware. This global survey captured insights from 1,000+ IT professionals in companies across North America and Europe.

Key Hardware Findings:

  • AMD processor usage is poised to grow: Within two years, business adoption of AMD is expected to rise to 60% for PCs and 44% for servers.
  • Storage acceleration trends continue: More than two-thirds (68%) of enterprises (500+ employees) plan to adopt all-flash storage arrays within the next two years.
  • The cloud “pay-as-you-go” model is becoming more popular on-premises. More than half (57%) of enterprises expect to adopt consumption-based infrastructure by the end of 2023.
  • Most (54%) businesses plan to use speedy NVMe storage technology in their on-premises servers by the end of 2023.
  • Adoption of ARM server processors is poised to double from 11% of businesses currently to 22% within the next two years.

Cloud and Hardware Aren’t Mutually Exclusive

As the modern work environment continues to evolve, organizations allowing remote work are investing in technology to support a more flexible, hybrid infrastructure. SWZD’s State of IT research revealed a shift towards cloud (22% of overall IT budgets in 2020 to 26% in 2022) at the expense of hardware spending (33% of IT budgets in 2020 to 30% in 2022).

Even with this shift, on-premises hardware continues to provide critical value. In a hybrid world, on-premises servers will increasingly integrate with cloud infrastructure, allowing organizations to migrate more easily and balance workloads, while increasing resilience.

Currently, 36% of organizations have integrated their on-premises infrastructure with a public cloud (also referred to as hybrid cloud). An additional 18% plan to implement this capability, meaning the majority of companies are expected to have hybrid cloud capabilities by the end of 2023.

Hardware on the Horizon

In the future, companies will continue to invest in on-premises infrastructure, which is evidenced by the evolution taking place within server rooms around the world.

For example, 56% of businesses have adopted embedded remote management (e.g., Dell’s iDRAC, HPE iLO technologies) — which can help IT professionals manage servers from anywhere.

Most companies (55%) also have fault tolerance/failover capabilities in place, often implemented through virtualization and hyperconverged systems, which allow for business continuity in the event of hardware failure.

Roughly one-third of organizations currently have the following capabilities:

  • Software-defined storage (39%)
  • Server automation / orchestration (37%)
  • Software-defined networking (36%)

Consumption-based billing has made its way to server rooms — instead of buying their hardware outright, businesses can now opt for “as-a-service” billing for on-premises infrastructure. Several hardware manufacturers offer solutions designed with cloud integration in mind to pull on-premises and cloud payment models in alignment with technology stacks.

Today 25% of organizations use this consumption-based infrastructure technology, with that number jumping to 39% among enterprises (500+ employees).

Evolving Technology Stacks

Storage infrastructure also continues to evolve as organizations look to once out-of-reach technologies like fast flash in lieu of traditional spinning hard disk drives. For example, 24% of companies use all-flash storage arrays today and an additional 20% plan to by the end of 2023.

Adoption of external all-flash storage arrays jumps higher in larger companies. Only 14% of the smallest companies (1-99 employees) currently use all-flash storage, compared to 39% of enterprises.

Beyond the server room, end-user hardware adoption is changing too: Today’s pandemic-induced remote work climate calls for portability than traditional desktops can offer. SWZD’s 2022 State of IT report shows approximately 40% of employees using laptops and 40% using desktops.

As businesses further adapt to a hybrid future, their tech stacks will continue to evolve as IT departments seek out functionality to drive their businesses forward.

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