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Public cloud services spend set to double, reaching $195 billion

11 Aug 2016

Revenue on public cloud services is set to double by 2020, with new forecasts from IDC predicting spending will amount to more than $195 billion, up from the $96.5 billion in revenues forecast for 2016.

The figures represent a compound annual growth rate of 20.4% over the 2015-2020 forecast period.

According to the latest update of IDC’s Worldwide Semiannual Public Cloud Services Spending Guide, cloud software was responsible for 83.7% of all public cloud revenue in 2015.

Cloud software constitutes the service enablement of products in all three primary software markets: applications as a service, system infrastructure software (SIS) as a service (which combine to form SaaS), and application development and deployment (AD&D) or platform as a service (PaaS).

The remaining 16.3% belongs to infrastructure as a service (IaaS), the report shows.

IDC says Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) revenues are forecast to grow at a faster rate than SaaS, expanding their share of overall revenues in the process.

"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," explains Benjamin McGrath, senior research analyst, SaaS and Business Models.

"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,” he says.

The industries leading the way in public cloud services spending are discrete manufacturing, banking, and professional services, representing nearly a third of total worldwide revenues in 2016, according to the forecast.

The industries that will see the fastest revenue growth over the five-year forecast include media, telecommunications and retail. However, all 20 of the industries profiled in the spending guide will experience revenue growth of more than 100% over the forecast period, IDC states.

Eileen Smith, programme director, Customer Insights and Analysis, says 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.

“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,” she says.

The forecast reveals the United States will be the largest market for public cloud services, generating nearly two thirds of total worldwide revenues throughout the forecast, followed by Western Europe and Asia/Pacific (excluding Japan)(APeJ).

Latin America and APeJ will experience the greatest revenue growth over the forecast period, while all eight regions are forecast to see revenue growth greater than 100% over the next five years.

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