On-prem spend sinks as demand for cloud solutions sours - research

Spending on hosting and cloud solutions totalled $12bn in the second quarter of 2020, according to Synergy Research

On-premise spend plummeted in the second quarter of the year as organisations clamoured for cloud collaboration solutions in lockdown, according to Synergy Research.

The analyst reported that spend on unified comms (UC) collaboration tools grew seven per cent year-on-year in the quarter, totalling $12bn.

Spending on on-premise dropped 18 per cent year-on-year to less than $4bn while hosting and cloud solutions grew by the same figure, now accounting for over three-quarters of the market, reported Synergy.

It wasn't all doom and gloom for on-prem in the report, though. While total on-premise spending saw a decline, there was growth in video conferencing. The largest segments for spend were IP Telephony, video conferencing, on-prem email and content management.

Teams software-as-a-service (SaaS), conferencing SaaS and communications platform-as-a-service (CPaaS) all saw the most growth out of the hosting and cloud segments. As a result of this, Slack, Zoom Twilio and Vonage all now rank in the top ten of collaboration vendors.

"We were already seeing a steady migration in the collaboration market away from on-premise products and towards cloud solutions," stated Jeremy Duke, founder and chief analyst at Synergy Research Group.

"COVID-19 and the sudden radical change in working practices has resulted in an acceleration of that transition.

"CIOs need to find ways of maintaining communications and productivity in a world where remote working is the new norm and offices are sparsely populated. This is a world for which hosted and cloud solutions are perfectly suited."