UPDATED 21:31 EDT / FEBRUARY 22 2017

INFRA

Report: Public cloud spending to grow seven times faster than IT overall

Public cloud spending continues to explode, with worldwide investments set to rise this year over 24 percent, to $122.5 billion, according to International Data Corp.’s latest Worldwide Semiannual Public Cloud Services Spending Guide.

Bearing in mind that IDC recently reported that total worldwide information technology spending is expected to hit $2.4 trillion in 2017, that means public cloud spending still only represents around 5 percent of the overall pie. But the segment is vastly outperforming other parts of the industry, with a growth rate that’s almost seven times faster than that of overall IT spending.

That rate of growth is unlikely to slow down any time soon either, with IDC forecasting public cloud spending to increase by 21.5 percent annually from 2015 through 2020, hitting $203.4 billion worldwide.

Software-as-a-service, or cloud-based applications such as Google Docs or Saleforce.com’s customer relationship management services, remains the most important segment, and is expected to capture around two-thirds of all cloud spending by the end of this year. And while SaaS’s dominance might fade over time, it will still account for 60 percent of cloud spend by 2020, IDC said.

However, growth in SaaS spending will be left in the dust by other market segments, IDC reported. The analyst firm said it expects spending on infrastructure-as-a-service, the base-level computing and storage services offered by the likes of Amazon Web Services, to jump more than 30 percent annually through 2020. Platform-as-a-service, which offers application development and hosting in the cloud, will shoot up more than 32 percent, IDC forecasts.

IDC also provided a breakdown of cloud spending according to industry, company size and geographic region. The discrete manufacturing, professional services and banking sectors are expected to lead the way, accounting for about a third of all spending through 2017, or $41.2 billion. Growth rates vary in other industries. Professional services tops the list with an expected annual growth rate of almost 24 percent, followed by retail with almost 23 percent annual growth, media with 22.5 percent annual growth and telecommunications with a little over 22 percent annual growth.

Large enterprises with more than 1,000 employees will account for around half of all public cloud spending in 2017, with an expected growth rate of 23 percent. The U.S. remains public cloud’s biggest market, with more than 60 percent of total worldwide revenues. Western Europe and Asia/Pacific (excluding Japan) will be the second- and third-largest regions at $24.1 billion and $9.5 billion, respectively. However, the latter grow the fastest, with an expected annual growth rate of 28 percent through 2020.

“European companies have been slower in the adoption of cloud when compared to their U.S. counterparts,” said Serena Da Rold, senior research manager of IDC’s Customer Insights and Analysis. “But now the market is maturing, and it is the right time for cloud providers to target and capture the untapped segments.”

Photo: SIII87 Flickr via Compfight cc

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