Wall Street Journal – Big Firms Focus Tighter IT Spending on Cloud: J.P. Morgan Chase

Budget pressures have large firms focusing technology spending on cloud services, leaving some IT vendors behind – and Wall Street analysts are taking notice.

J.P. Morgan Chase & Co., in a report released Thursday, said big companies are shifting more workloads to Microsoft Corp.’s Azure and Amazon.com’s AWS cloud services, while keeping IT budgets tight.

The accelerated move to the cloud, and in particular the rapid rise of Amazon’s AWS cloud service among large corporations, signals a “changing of the guard” in enterprise IT, suggesting that “threats to traditional, on-premise IT infrastructure vendors are serious,” the report said.

It said Microsoft still holds a commanding lead in the IT market for large businesses, but AWS, which has long been popular with smaller firms, is making significant inroads.

The findings are based on a survey of 207 CIOs with an average annual IT budget per firm of $600 million, together representing some $126 billion in enterprise IT spending every year.

Despite their size, IT budgets at these firms are set to grow this year by only 2.8%, compared to more typical annual growth rates of 3% to 4%, the report said. At the largest firms – those with annual IT budgets of more than $2 billion – spending is expected to growth by less than 1%.

Both Gartner Inc.IT +0.33% and International Data Corp. have reported similar slowdowns this year in enterprise IT spending.

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