In Gartner's latest quarterly IT spending report, the research firm for the first time broke out cloud computing as a separate forecast category, providing an in-depth analysis of current and future cloud spending trends. The hottest growth in the cloud market in the coming year will be in infrastructure as a service (IaaS), which is expected to grow by 41%. Management and security is the second-hottest cloud growth area, expected to rise 27.2%, with platform as a service (26.6%), SaaS (17.4%) and business process as a service (15%) rounding out the top five. "The cloud market is growing at a pretty rapid clip," Anderson says. "Cloud services within the broader IT spending market are still small, but the growth rate looks promising."

Meanwhile, computing hardware sales are expected to rise only 3.4% this year to $420 billion, which compares to 7.4% growth last year. Enterprise software, after increasing 9.8% last year, is expected to reach $281 billion this year, a 4.3% growth clip.

Examples of Anderson's predictions about cloud's promise can be seen across the market. Some startup e-commerce sites, , don't own any infrastructure and have decided to run their entire company from the Amazon Web Services cloud. Other companies are taking a more measured approach to embracing the cloud.

GFI Software, which provides a range of IT service management software products, including infrastructure, security and email services, recently announced a plan to transition all of its software offerings to a cloud-based SaaS delivery model. "We have to do it, it's the wave of the future," says CEO Walter Scott. "Customers want simplicity, and the cloud is the simplest way to deliver a software service." The cloud offers faster deployment for consumers and easier management. In a cloud-based model GFI will be able to automatically install security patches or other updates from a central point and have those distributed to all of the application's users.

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