Edge initiatives are driving new spending and new vendor relationships

Organizations with edge applications in place view these applications and the IT environments that support them as critical to their transformation over the next five years. They also see these initiatives leading to new spending on edge infrastructure and services in the immediate future, as well as driving engagements with new technology vendors. Common approaches rely on IT equipment and software vendors, as well as public cloud vendors; incorporate both capital and operating expenditure models; and emphasize private infrastructure environments. These issues are reflected in the response to 451 Research’s Edge Infrastructure & Services, Sourcing 2022 survey.

Fielded Aug. 23-Sept. 12, 2022, with a panel of approximately 672 IT decision-makers at organizations using or in the process of evaluating or deploying edge infrastructure and services, this survey examines the types of edge services and resources organizations are adopting, the types of suppliers they are sourcing from, and the consumption models they are using in acquiring these technologies.

The Take

The latest data from our Edge Infrastructure & Services, Sourcing survey reveals complexity in edge computing demand dynamics. Most organizations surveyed consider edge computing architecture decisions important to achieving their digital transformation objectives. Almost one-third (30%) of respondents expect to significantly increase edge spending in the short term, with material variation depending on region, company size and vertical industry. While private, single-tenant edge architectures are currently preferred, we expect public/private edge as a service to be a longer-term target, following secular IT consumption trends.

Healthy expected demand validates the investment in services and ecosystem made by a diverse crew of edge infrastructure and service suppliers over the past few years. It is less clear which consumption models and specific types of suppliers will accrue market scale fastest. For any individual enterprise, many variables go into edge architecture and business model decisions, including the legacy infrastructure they have in place. Whatever shape future investments and partnerships take, nearly 50% of respondents strongly agree that edge opens the door to new types of vendors and service providers.

Summary of Findings

Private configurations are the most commonly cited infrastructure environments supporting edge applications. When asked what types of infrastructure or services they use or are considering to support edge applications, the two most popular responses by a significant margin are private edge cloud (identified by 55% of respondents) and private edge cloud with integrated 4G/5G service (also known as private multi-access edge computing, or MEC, at 69%). Public cloud MEC without integrated 4G/5G (27%), public edge cloud (26%) and public cellular network edge cloud (21%) are less frequently cited, although still somewhat common.

Both capex and opex are considered viable spending models for edge infrastructure. Among respondents with edge infrastructure in production or in plan, the most common position is an equal preference for opex and capex (38% of respondents). Among those who prefer one model, a preference for opex spending (32%) is more common than capex (24%).

IoT Connectivity Challenges and Security Shortfalls

IT equipment and software vendors and public clouds are most commonly viewed as the suppliers of edge infrastructure and services. When asked which types of suppliers they were likely to consider sourcing edge infrastructure and services from in the future, organizations with edge in production or in plan most commonly cite IT equipment or software vendors (60% of respondents), followed by public cloud vendors (54%). Telecom operators, mobile carriers and multiple system operators (39%), and enterprise SaaS providers (39%) are a tier below.

Existing edge deployments are almost universally leading to new edge spending and new vendors. More than three-quarters (80%) of organizations with edge in use, proof of concept or plan say they expect edge spending to increase in 2023, with 32% expecting a “significant” increase. Just 15% expect spending to stay flat, and only 4% expect a decrease. An even greater majority (91%) agree with the premise that the need for IT resources to support edge computing will lead their organization to work with new technology vendors.

Future transformation efforts will rely on edge and related technologies. Almost all respondents (89%) agree with the notion that their digital transformation objectives depend on building efficient and performant edge computing architecture. When asked which technologies will significantly impact transformation efforts over the next five years, respondents with edge in production, POC or plan most frequently point to 5G (47% of respondents), AI applied to organizational IT data (42%), and edge computing infrastructure and services (40%).

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