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IDC: Global public cloud spend set to double by 2020

Market watcher predicts use of public cloud will soar over the next five years, with IaaS and PaaS leading the way

The amount of money spent on public cloud services is set to double between now and 2020 as enterprise IT leaders strive to cut costs and retain their competitive edge, IDC has forecast.

According to the analyst house’s Worldwide Semi-annual Public Cloud Services Spending Guide, the revenue generated by the public cloud services market will hit $195bn in 2020, up from $96.5bn this year.

Benjamin McGrath, senior research analyst for software as a service (SaaS) at IDC, said the next five years would see the use of public cloud software explode in the enterprise.

“Cloud software will significantly outpace 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,” he said.

“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’s figures show that the infrastructure as a service (IaaS) market accounted for 16.3% of public cloud spend in 2015, with the remaining 83.7% taken up by investments in SaaS and platform as a service (PaaS) tools.

PaaS use set to soar

But this pattern of spending is expected to be turned on its head in the coming years, said IDC, with the amount enterprises invest in IaaS and PaaS predicted to grow more quickly than SaaS.

It is a trend a few analysts have predicted will play out over time, as enterprises’ cloud requirements and migration paths mature and become more complex.

For example, a large portion of SaaS-related IT spend is generated through enterprise upgrade projects, as suppliers roll out cloud-based replacements for their flagship on-premise software products.

However, for some pieces of legacy software there may be no upgrade path to SaaS or enterprises may require custom-built software, which may lead them to go down the PaaS root instead.

This is so that enterprises can build their own applications, and use IaaS to get access to the scalable storage and server resources to support them.

Patterns of adoption

The manufacturing, financial and professional services industries will be responsible for driving much of the demand for public cloud services, and will account for about one-third of global spend in this area in 2016.

But over the next five years, IDC predicts public cloud spend will rise most rapidly in the media, telecommunications and retail markets.

From a geographic standpoint, IDC expects the US to emerge as the largest consumer of public cloud services, and be responsible for generating about two-thirds of the total worldwide revenue this market produces up to 2020.

Read more about cloud adoption trends

Eileen Smith, programme director of customer insights and analysis at IDC, said cloud was having a freeing effect on enterprise IT managers, who were no longer held back by legacy IT.

“Cloud computing is breaking down traditional technology barriers as line-of-business leaders and their IT organisations rely on cloud to flexibly deliver IT resources at the lower cost and faster speed that businesses require,” said Smith.

“Organisations across all industries are now free to adapt to market changes quicker and take more risks, as they are no longer bound by legacy IT constraints.”

Read more on Infrastructure-as-a-Service (IaaS)

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