Gartner: Public Cloud 2.0 drives India IT infrastructure spending

More Indian companies moving infrastructure and applications from on-premise to public clouds; investments in software defined networking and storage growing

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Cloud

IT infrastructure spending in India will total $2.2 billion in 2017, a 1.5 percent increase from 2016, according to Gartner. The IT infrastructure market includes server, storage and enterprise networking equipment. However, spending on infrastructure is in single digit growth and is marginal. This is due to a number of reasons: spending on hyperconvergence, growth in public cloud and software defined storage and networking. 

“Over the next five years we will see marginal growth from $2.2 billion to $2.3 billion. This is because we are seeing a lot of (cost) optimisation happening. The entry of integrated systems into the market, especially hyperconverged systems, is bringing down the cost of infrastructure. It’s not that people are not buying infrastructure; they are looking at ways of optimising costs. They ask ‘how do we invest in technology to save money?’” said Naveen Mishra, research director at Gartner.

Gartner released current and projected spends on IT infrastructure in India (See Table 1). However, these figures do not include spending on public cloud infrastructure, integrated systems and hyperconvergence. These figures are for discreet systems, on-premise.

Enterprise networking is the biggest segment within the Indian IT infrastructure market with revenue expected to reach $1.1 billion in 2017 (see Table 1). Software defined networking, SD-WAN are other options which organisations are evaluating while they build their next generation network infrastructure, to enable a seamless digital experience for customers, employees and partners.

Table 1

IT Infrastructure Spending in India
by Segment (Millions of U.S. Dollars)












































Segment



2016



2017



2018



2019



2020



Enterprise Networking



 
1,063



 
1,127



 
1,148



 
1,157



 
1,147



Storage



    
346



    
352



    
365



    
378



    
387



Servers



    
765



    
727



    
768



    
820



    
822



Total



 
2,174



 
2,206



 
2,282



 
2,354



 
2,356



Source: Gartner (April 2017)

Cloud is another reason for the marginal increase in IT infrastructure investment. The cloud vendors are investing heavily on infrastructure and those investments are paying rich dividends, as more enterprises move to the public cloud. Amazon Web Services for instance, has seen over 50 per cent growth in its India customer base in the past one year.

The mid-market moved quickly to the public cloud. The drivers for this were lack of skills (on-premise), combined with the speed and agility of the cloud. 

The enterprise segment was at first hesitant to move applications to the public cloud for various reasons. However, there is more confidence in the cloud now (better security, for instance), and we are seeing the second wave of the public cloud in India and worldwide, with more enterprises joining in.

“Enterprises began by moving peripheral workloads (non-core) to the public cloud. Now enterprises are moving some important applications to the cloud. We are in the second phase of public cloud in India. In moving to the cloud, enterprises can focus more on business projects rather than IT. In some instances, there are cost savings. It is really about resource optimisation,” said Mishra. 

Instead of going straigt to the cloud, some enterprises opt for hosted and managed services, such as those offered by data centers in India.

Enterprises are also steering their infrastructure towards software.

“In the storage market, software defined storage is gaining traction. People are looking at more ways of optimising the (cost of) storage technologies. Many are buying storage capacity from cloud providers such as  Amazon and Google,” said Mishra.

The storage market is also witnessing a change, largely driven by cost optimisation and technologies like SSD (Solid State Storage).

“With a revenue projection of $352 million in 2017, storage investment will witness a small increase primarily driven by technology alternatives such as SDS, and flash based storage coupled with continued focus on SAN based storage,” said Mishra.

In the Networking space, more service providers are investing in SDN (software defined networks). 

“We see more use cases now in SDN. In the past 12 – 18 months we saw growing traction. Some of the large retailers and financial services companies are doing PoCs and investing into SDN,” informed Mishra.  

In servers, the traction is seen mainly in the x86 rack systems. However, this Gartner study does not include the integrated systems, although these systems are seeing healthy growth in India and the rest of the world.

Mishra also highlighted some of the new areas of investment, which include smart city deployments and IoT initiatives. 

“Customers continue to invest in technology to save money, and use some of those savings for new projects,” said Mishra. “The new investments in smart cities, for instance, is fuelling the marketplace.”

Some of the new investments are also being made in IoT projects, towards sensors and infrastructure. As more things get connected a layer of infrastructure will be required to support this. 

“This (IoT) is a positive and high growth area in India as it will drive a number of services. We can expect more citizen services, for instance,” said Mishra. 




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