McKinsey Predicts Cloud Service Dominance, Greater DevOps Use by 2020

With companies looking to free up capital while increasing operational flexibility, Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) are positioned to dominate IT investments in 2018, according to a recent trend report from management consulting company McKinsey & Company. The report, titled, “Ten Trends Redefining Enterprise IT Infrastructure,” combines research and projections to provide forward-looking perspectives about a wide range of technology topics. It indicates, for example, that Amazon, Microsoft, Google and IBM’s public cloud services could transform IT infrastructure provisioning by 2020. During this period enterprises will also make greater use of open source and DevOps.

Organizations will increasingly turn to cloud services for their IT technology needs to reduce risk while freeing up capital and boosting operational flexibility. From 2015 through 2016, revenue generated by IaaS and Platform as a Service PaaS increased by 53 percent.

Amazon Web Services, Microsoft, Google and IBM account for 65 percent of the IaaS market today. Amazon leads with a 40 percent market share. With on-premises data centers declining, McKinsey projects that the four companies could account for nearly one-half of all IT infrastructure provisioning by 2020.

Nearly two-thirds of companies increased their use of open-source software from 2015 to 2016. This growth should continue, driven by initiatives such as Facebook’s Open Compute Project, which has expanded the open-source movement’s impact on corporate data centers.

Four of five technology executives report that they struggle to defend against cyber-threats. Cloud-based security offerings have emerged as a possible answer. McKinsey predicts that they should account for 60 percent of security products by 2020, up from 10 percent in 2015.

Businesses are now going to original-design manufacturers (ODMs) with their server specifications for customized data-center configurations. By 2020, “self-built” servers will represent one-half of the hyperscale-server market, McKinsey predicts.

McKinsey reports that 96 percent of companies expect to increase Internet of Things spending over the next three years. Business-to-business applications will drive nearly 70 percent of the value of IoT investment for the next decade.

Two Asian companies are dominating the data center hardware market. Huawei, which is spending $1 billion of its $9 billion R&D budget on equipment for data centers and Lenovo, which acquired IBM’s x86 server business in 2014.

Four of five organizations have implemented DevOps practices in some form. In addition, 53 percent indicate that they’ll apply DevOps throughout their entire company by 2020, up from 37 percent today.

No longer a niche technology, containers are positioned to overtake virtual machines as the primary means of cloud application deployment, McKinsey predicts. Currently, more than one-third of software professionals have adopted containerization for development purposes.

Through leading-edge artificial intelligence and machine learning, about one-half of the jobs people currently do now can be automated. If this happens, it will account for nearly $15 trillion in wages.