Cloud computing has changed from an emerging technology to a key part of modern IT setup in the past ten years. Moving to the cloud isn’t just a short-term trend but a complete rethink of how businesses work, develop new ideas and provide value to their customers.
As companies worldwide go digital, cloud computing has become the core of this change, making it possible to be quick, grow easily, and save money. But as new tech like Artificial Intelligence (AI) shows up, where IT money goes is changing. This makes organizations look again at their plans to get the most out of both cloud and AI.
This article examines how cloud computing’s role in IT investment is changing. It focuses on how cloud infrastructure is becoming essential to digital transformation and how AI impacts this area.
Cloud computing takes off
Companies no longer need to spend big on servers and data centers at their sites. Cloud computing offers a flexible, pay-as-you-go option that lets businesses scale their IT resources based on their needs. Now, even small and mid-sized companies have access to a technology that was once out of their reach.
According to a report, the number of organizations using cloud computing has risen from 91% in 2020 to 98% in 2024, making it the most popular new tech being adopted. This widespread use shows how much money is spent on public cloud services, over $560 billion.Â
How AI is changing IT spending plans
Recent analysis from Gartner shows that worldwide IT spending will total more than $5 trillion in 2024, with 10% year-on-year growth in spending on data center systems.Â
While cloud computing remains essential to digital transformation, the rise of AI is prompting organizations to shift their IT investment priorities. AI can revolutionize various aspects of business operations, from automating routine tasks to providing advanced analytics and decision-making capabilities. Yet, as more companies start to use AI, they’re also taking a fresh look at their current IT setup, including their cloud investments.
GitLab’s developer survey of over 5,000 DevSecOps professionals found that 74% of people from organizations that use AI want to combine their toolchains, compared to 57% of those who don’t use AI. This frustration comes from the complicated and scattered nature of existing toolchains, making it harder to deploy AI models.
AI’s influence on toolchain complexity points to a bigger picture: companies must streamline and boost their IT setup as they invest more in AI. This means combining different tools and systems into one unified platform, which is easier to manage and scale. For many businesses, this leads to more spending on cloud systems that offer the flexibility and room to expand needed to back AI projects.
Cloud computing becomes table stakes
The GitLab survey also showed that cloud computing, a top IT investment priority for years, dropped to fifth place in 2024. This shift in ranking doesn’t mean cloud computing is less important. Instead, it suggests that the cloud has become so crucial to IT operations that it is now considered table stakes — a baseline requirement for modern businesses.
At the same time, the survey revealed a big jump in the number of companies running half or more of their apps in the cloud. This shows that even though cloud computing isn’t the main focus for investment anymore, it’s still crucial for many businesses. The cloud isn’t seen as something that sets companies apart now but as a must-have for digital change.
This change in outlook stems from the change in digital transformation. As companies keep adopting new tech like AI, they need help deciding where to allocate their IT budget.Â
Balancing investment with emerging technologies
Looking to the future, cloud computing will continue to play a key role in IT investment and digital transformation. However, its role is evolving,, and organizations must find the right balance between investing in cloud systems and adopting new technologies to stay ahead of their competitors.
By 2025, cloud technologies will account for over 65.9% of the cost of application software, a rise from 57.7% in 2022. Also, Gartner predicts the shift to the cloud will impact more than $1.3 trillion in enterprise IT spending in 2022, growing to about $1.8 trillion in 2025. These numbers show that cloud computing stays crucial even as companies spread their IT investments.
Another field to watch is the growing use of no-code development tools for AI and automation projects. As AI becomes more widespread, most companies are likely to use no-code and low-code platforms that can reduce app development time by 90%. By 2025, 70% of new business applications will utilize these technologies.
Future of IT investments
As we head into 2024, cloud computing will remain essential, but its role will continue to evolve. Companies will probably keep investing into AI and other new tech, but they’ll build these on top of cloud systems. So, the cloud isn’t getting pushed aside. Instead, it’s becoming a bigger part of how businesses integrate digital innovations into their current workload.
To wrap up, AI influences IT investment priorities, but cloud computing still serves as the essential infrastructure that supports this change. As companies continue to navigate the complexities of digital transformation, they’ll need to strike the right balance between investing in the cloud and harnessing AI’s potential.
