Despite the rise of the cloud, on-premise data centers and computing remain stable

According to a new report by Synergy Research Group, hyperscale businesses now operate nearly  900 large data centers, constituting approximately 37 percent of the worldwide capacity. As per the research firm, non-hyper-scale colocation capacity covers approximately 23% of global capacity, while on-premise capacity accounts for the remaining 40%.

The proportion of cloud to on-premises computing capacity is rapidly shifting. Synergy estimated that almost 60 percent of data center bandwidth was in on-premise facilities five years ago; in the next five years, hyperscale operators will account for more than 50 percent of all capacity, while on-premise facilities will account for less than 30 percent. Despite the fact that the cloud-to-on-premise capacity ratio will continue to grow, the actual on-premise capacity is only anticipated to decline marginally. Similarly, while cloud expenditure has increased significantly, it has not come at the expense of on-premise.

Ten years ago, Synergy reported that enterprises spent over $80 billion annually on IT hardware and software for their own data centers while investing well under $10 billion on cloud infrastructure services, which were then in their infancy. Currently, cloud expenditures are increasing by an average of 42% per year and will reach $227 billion in 2022. Additionally, on-premise expenditures have increased, but only by an average of two percent per year, reaching approximately $100 billion last year.