Public cloud services market to grow in 2017

Gartner predicts market will grow 18 per cent
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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)

 

2016

2017

2018

2019

2020

Cloud Business Process Services (BPaaS)

40,812

43,772

47,556

51,652

56,176

Cloud Application Infrastructure Services (PaaS)

7,169

8,851

10,616

12,580

14,798

Cloud Application Services (SaaS)

38,567

46,331

55,143

64,870

75,734

Cloud Management and Security Services

7,150

8,768

10,427

12,159

14,004

Cloud System Infrastructure Services (IaaS)

25,290

34,603

45,559

57,897

71,552

Cloud Advertising

90,257

104,516

118,520

133,566

151,091

Total Market

209,244

246,841

287,820

332,723

383,355

Source Gartner 

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.

PCR's Sector Spotlight on the Cloud – in association with Westcoast – is running throughout September 2016 - click here for more articles

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