UPDATED 02:06 EDT / AUGUST 12 2016

NEWS

Public cloud spending to more than double to $195BN by 2020

International Data Corp. (IDC) reckons that global spending on public cloud services will hit $195 billion a year by 2020. The forecast came in its Worldwide Semiannual Public Cloud Services Spending guide on Wednesday, which predicts $96.5 billion of spending this year, and a compound annual growth rate of 20.4 percent between 2015 and 2020.

IDC’s report also shows that 16.3 percent of public cloud spending last year went on Infrastructure-as-a-Service (IaaS), while cloud software accounted for 83.7 percent. IDC sub-categorizes cloud software as Applications-as-a-Service and system infrastructure software (SIS), which covers SaaS and app development and deployment (AD&D), or Platform-as-a-Service (PaaS). It says that IaaS and platform revenues will grow faster than SaaS, however.

“Cloud software will significantly out-pace traditional software product delivery over the next five years, growing nearly three times faster than the software market as a whole and becoming the significant growth driver to all functional software markets,” said Benjamin McGrath, senior research analyst for SaaS and Business Models at IDC, in a statement. “By 2020, about half of all new business software purchases will be of service-enabled software, and cloud software will constitute more than a quarter of all software sold.”

IDC said that the banking, discrete manufacturing (which means manufacturing of countable finished products) and professional services industries are the biggest public cloud spenders, accounting for a third of all spend in 2016. However, IDC said that all of the 20 industries it covered in its study will see revenues for cloud providers more than double over the next five years. The leading growth industries will be media, retail and telecommunications, the analyst firm said.

Breaking down spend by region, IDC said the U.S. will remain the biggest market for public clouds. However, the fastest revenue growth will take place in Latin America and Asia-Pacific (not including Japan). Spending in all eight regions of the world will grow by over 100 percent, IDC said.

IDC’s forecasts are credible, given that in 2013 it predicted public cloud spending to hit $47.4 billion that year, and $107 billion in 2017, which more or less tallies with trends observed today.

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