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Spending on public cloud services still soaring: IDC

Cloud

According to the IDC’s Worldwide Semiannual Public Cloud Services Spending Guide, worldwide spending on public cloud services and infrastructure will reach $122.5 billion in 2017, an increase of close to 25 per cent (24.4%) since last year.

IDC tracks public cloud services spending in a five-year window starting in 2015. In the time so far, overall public cloud spending will experience a 21.5 per cent compound annual growth rate (CAGR) – nearly seven times the rate of overall IT spending growth.

By 2020, which is the end of IDC’s tracking period, the research firm predicts public cloud spending will reach $203.4 billion worldwide.

What is causing this trend?

IDC believes Software-as-a-Service (SaaS) will remain the dominant cloud computing type, capturing nearly two thirds of all public cloud spending in 2017 and roughly 60 per cent in 2020. SaaS spending, which is comprised of applications and system infrastructure software (SIS), will in turn be dominated by applications purchases, which will make up more than half of all public cloud spending throughout the forecast period. However, spending on Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) will grow at much faster rates than SaaS with five-year CAGRs of 30.1 per cent and 32.2 per cent, respectively.

Eileen Smith, IDC’s program director, customer insights and analysis, said in 2017, discrete manufacturing, professional services, and banking will lead the pack in global spending on public cloud services as they look for greater scalability, higher performance, and faster access to new technologies.

She added that combined, these three industries will account for one third of worldwide public cloud services spending, or $41.2 billion.

The industries that will see the fastest growth in public cloud spending over the five-year forecast period are professional services (23.9 per cent CAGR), retail (22.8 per cent CAGR), media (22.5 per cent CAGR), and telecommunications (22.1 per cent CAGR). It is worth noting, however, that 18 of the 20 industries included in the Spending Guide will experience five-year CAGRs greater than 20 per cent.

In terms of company size, nearly half of all public cloud spending will come from very large businesses (those with more than 1,000 employees) while medium-sized businesses (100-499 employees) will deliver more than 20 per cent throughout the forecast. Large businesses (500-999 employees) will see the fastest growth with a five-year CAGR of 23.2 per cent. While purchase priorities vary somewhat depending on company size, the leading product categories include customer relationship management (CRM) and enterprise resource management (ERM) applications in addition to server and storage hardware.

On a geographic basis, the United States will be the largest market for public cloud services, generating more than 60 per cent of total worldwide revenues throughout the forecast..

“As cloud adoption expands over the next four years, what clouds are and what they can do will evolve dramatically – in several important ways. The cloud will become more distributed (through Internet of Things edge services and multi-cloud services), more trusted, more intelligent, more industry and workload specialized, and more channel mediated. As the cloud evolves these important new capabilities – what IDC calls ‘Cloud 2.0’ – the use cases for the cloud will dramatically expand,” added Frank Gens, senior vice president and chief analyst at IDC.

The Worldwide Semiannual Public Cloud Services Spending Guide quantifies public cloud computing purchases by cloud type for 20 industries and five company sizes across eight regions and 47 countries. Unlike any other research in the industry, the comprehensive spending guide was designed to help IT decision makers to clearly understand the industry-specific scope and direction of public cloud services spending today and over the next five years.