Good news, Cloud fans – the worldwide public cloud services market is projected to grow 18 per cent in 2017 to a total of $246.8 billion, up from $209.2 billion in 2016, according to Gartner.
The highest amount of growth is set to come from cloud system infrastructure services, which is projected to grow 36.8 per cent in 2017 to reach $34.6 billion. Cloud application services are expected to grow 20.1 per cent to reach $46.3 billion.
"The overall global public cloud market is entering a period of stabilization, with its growth rate peaking at 18 percent in 2017 and then tapering off over the next few years," said Sid Nag, research director at Gartner. "While some organizations are still figuring out where cloud actually fits in their overall IT strategy, an effort to cost optimize and bring forth the path to transformation holds strong promise and results for IT outsourcing (ITO) buyers. Gartner predicts that through 2020, cloud adoption strategies will influence more than 50 per cent of IT outsourcing deals."
"Organisations are pursuing strategies because of the multidimensional value of cloud services, including values such as agility, scalability, cost benefits, innovation and business growth," Nag added. "While all external-sourcing decisions will not result in a virtually automatic move to the cloud, buyers are looking to the 'cloud first' in their decisions, in support of time-to-value impact via speed of implementation."
Table 1. Worldwide Public Cloud Services Forecast (Millions of Dollars)
Cloud Business Process Services (BPaaS)
Cloud Application Infrastructure Services (PaaS)
Cloud Application Services (SaaS)
Cloud Management and Security Services
Cloud System Infrastructure Services (IaaS)
It is expected that the software as a service (SaaS) market is expected to see a slightly slower growth as offerings mature, namely human capital management (HCM) and customer relationship management (CRM) and the acceleration in the buying of financial applications.
Nevertheless, SaaS will remain the second largest segment in the global cloud services market.
"As enterprise application buyers are moving toward a cloud-first mentality, we estimate that more than 50 percent of new 2017 large-enterprise North American application adoptions will be composed of SaaS or other forms of cloud-based solutions," said Nag. "Midmarket and small enterprises are even further along the adoption curve. By 2019, more than 30 per cent of the 100 largest vendors' new software investments will have shifted from cloud-first to cloud-only."
Gartner has said that it predicts more cloud growth in the infrastructure compute service space as adoption becomes increasingly mainstream. Additional demand from the migration of infrastructure to the cloud and increased demand from increasingly compute-intensive workloads (such as artificial intelligence (AI), analytics and Internet of Things (IoT)) – both in the enterprise and startup spaces – are driving this growth. Furthermore, the growth of platform as a service (PaaS) is also driving the growth in adoption of IaaS.
From a regional perspective, China's IaaS cloud market forecast has been increased to account for anticipated higher buyer demand over the forecast period. In particular, the larger pure-play IaaS providers in China, as well as other telecom-related cloud providers driving this market, are reporting significant growth. While China's cloud service market is nascent and several years behind the U.S. and European markets, it is expected to maintain high levels of growth as digital transformation becomes more mainstream over the next five years.