Global public cloud services spending to reach $160B this year

Worldwide spending on public cloud services and infrastructure is forecast to reach $160 billion in 2018, an increase of 23.2% over 2017, according to analyst firm IDC.

Although annual spending growth is expected to slow somewhat over the 2016-2021 forecast period, the market is forecast to achieve a five-year compound annual growth rate (CAGR) of 21.9% with public cloud services spending totaling $277 billion in 2021.

The industries that are forecast to spend the most on public cloud services in 2018 are discrete manufacturing ($19.7 billion), professional services ($18.1 billion), and banking ($16.7 billion). The process manufacturing and retail industries are also expected to spend more than $10 billion each on public cloud services in 2018.

These five industries will remain at the top in 2021 due to their continued investment in public cloud solutions.

The industries that will see the fastest spending growth over the five-year forecast period are professional services (24.4% CAGR), telecommunications (23.3% CAGR), and banking (23.0% CAGR).

“The industries that are spending the most – discrete manufacturing, professional services, and banking – are the ones that have come to recognize the tremendous benefits that can be gained from public cloud services,” said Eileen Smith, program director for customer insights and analysis at IDC.

“Organizations within these industries are leveraging public cloud services to quickly develop and launch 3rd Platform solutions, such as big data and analytics and the Internet of Things (IoT), that will enhance and optimize the customer’s journey and lower operational costs.”

Software as a Service (SaaS) will be the largest cloud computing category, capturing nearly two thirds of all public cloud spending in 2018.

SaaS spending, which is comprised of applications and system infrastructure software (SIS), will be dominated by applications purchases, which will make up more than half of all public cloud services spending through 2019.

Enterprise resource management (ERM) applications and customer relationship management (CRM) applications will see the most spending in 2018, followed by collaborative applications and content applications.

Infrastructure as a Service (IaaS) will be the second largest category of public cloud spending in 2018, followed by Platform as a Service (PaaS).

IaaS spending will be fairly balanced throughout the forecast with server spending trending slightly ahead of storage spending.

PaaS spending will be led by data management software, which will see the fastest spending growth (38.1% CAGR) over the forecast period.

Application platforms, integration and orchestration middleware, and data access, analysis and delivery applications will also see healthy spending levels in 2018 and beyond.

The United States will be the largest country market for public cloud services in 2018 with its $97 billion accounting for more than 60% of worldwide spending.

“Digital transformation is driving multi-cloud and hybrid environments for enterprises to create a more agile and cost-effective IT environment in Asia-Pacific. Even heavily regulated industries like banking and finance are using SaaS for non-core functionality, platform as a service (PaaS) for app development and testing, and IaaS for workload trial runs and testing for their new service offerings,” said Ashutosh Bisht, research manager for customer insights and analysis at IDC.

“Drivers of IaaS growth in the region include the increasing demand for more rapid processing infrastructure, as well as better data backup and disaster recovery.”

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