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Tech & Sourcing @ Morgan Lewis

TECHNOLOGY, OUTSOURCING, AND COMMERCIAL TRANSACTIONS
NEWS FOR LAWYERS AND SOURCING PROFESSIONALS

Annual spending worldwide on cloud services is expected to increase by 23% in 2021, according to a recent article in The Wall Street Journal, which cites a forecast by IT research and consulting firm Gartner Inc. Since the beginning of the COVID-19 pandemic, businesses have shifted to cloud-based services to support remote work, but businesses are also using the shift in attitudes toward cloud services to move more complex IT needs to the cloud. The article reasons that the push to use cloud services may also be due to the hybrid workplace model that many businesses are adopting, where workers can work both in the office and from home. This model requires that remote workers have access to critical software and infrastructure.

Gartner expects total global spending on cloud services to be approximately $332 billion by the end of 2021, which is an increase from $270 billion in 2020. Gartner further predicts that cloud-based software will remain the largest cloud segment, with $122.6 billion in annual spend, but infrastructure-as-a-service and desktop-as-a-service segments will see the highest growth. Sid Nag, a research vice president at Gartner, said, “Emerging technologies such as containerization, virtualization and edge computing are becoming more mainstream and driving additional cloud spending. Simply put, the pandemic served as a multiplier for CIOs’ interest in the cloud.”

In fact, worldwide spend on edge computing is expected to grow to $240.6 billion through 2024, at a compound annual growth rate of more than 15%, according to a second recent article in The Wall Street Journal, citing a forecast by technology industry research firm International Data Corp. Edge computing refers to data processing technology installed directly on the data source that is used to improve the performance and functionality of the applications and equipment on which it is installed.

Edge computing often uses artificial intelligence and makes instantaneous changes to the data source to lower costs or improve efficiency. Edge computing can also be used to create new revenue opportunities. The Wall Street Journal’s article states that Thomas Bittman, a research vice president at Gartner, said that edge computing is often used in “areas in which a real-time response is required, where a lot of data is being generated and cannot easily or cheaply be transferred back and forth, or for semi-automated functions.”