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Public cloud to see growth seven times greater than IT spend growth

22 Feb 2017

Public cloud services spend is forecast to grow at seven times faster than overall IT spending out to 2020 according to a new forecast from IDC – with Asia Pacific growth leading the way.

The market intelligence and advisory services company says public cloud spend will see a 21.5% compound annual growth rate between 2015 and 2020, with global spend hitting US$203.4 billion come 2020.

Asia Pacific, excluding Japan, is the third largest market – behind the United States and Western Europe – generating US$9.5 billion in revenue from public cloud services this year and is growing faster than any other region, at 28.0%.

Frank Gens, IDC senior vice president and chief analyst, says as cloud adoption expands over the next four years, what clouds are and what they can do will evolve dramatically.

“The cloud will become more distributed, through internet of things edge services and multi-cloud services; more trusted, more intelligent, more industry and workload specialised and more channel mediated,” Gens says.

“As the cloud evolves these important new capabilities – what IDC calls Cloud 2.0 – the use cases for the cloud will dramatically expand.”

While software-as-a-service will continue to remain the dominant cloud computing type, infrastructure-as-a-service and platform-as-a-service will grow faster with five year compound annual growth rates of 30.1% and 32.2% respectively, according to IDC’s Worldwide Semiannual Public Cloud Services Spending Guide.

SaaS, which includes applications and system infrastructure software, will capture nearly two-thirds of all public cloud spending in 2017 and around 60% in 2020. Applications purchases are predicted to make up more than half of all spend during the forecast period.

While discrete manufacturing, professional services and banking lead the pack in global spend this year, accounting for one-third of spend or $41.2 billion, it is professional services, retail, media and telecommunications which are forecast to see the fastest growth over the coming five years, at 23.9% CAGR, 22.8%, 22.5% and 22.1% respectively.

The growth across other industries isn’t to be sneezed at, however, with IDC noting that 18 out of 20 industries will experience five year CAGR greater than 20%.

Nearly half of all public cloud spending will come from businesses with more than 1000 employees, with medium sized companies – those with 100 to 499 employees – will deliver more than 20% of the spend during the forecast period.

The biggest growth in spend will come from businesses with 500 to 999 employees, with a CAGR of 23%.

“While purchase priorities vary somewhat depending on company size, the leading product categories include CRM and enterprise resource management applications in addition to server and storage hardware,” IDC says.

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