Proportion of enterprise IT spending on public cloud computing continues to increase
Worldwide end-user spending on public cloud services will grow 18.4% in 2021 to total USD 304.9 billion, up from USD 257.5 billion in 2020, according to Gartner.
“The pandemic validated cloud’s value proposition,” said Sid Nag, research vice president at Gartner. “The ability to use on-demand, scalable cloud models to achieve cost efficiency and business continuity is providing the impetus for organizations to rapidly accelerate their digital business transformation plans. The increased use of public cloud services has reinforced cloud adoption to be the ‘new normal,’ now more than ever.”
The proportion of IT spending that is shifting to cloud will accelerate in the aftermath of the COVID-19 crisis, with cloud projected to make up 14.2% of the total global enterprise IT spending market in 2024, up from 9.1% in 2020.
Although software as a service (SaaS) remains the largest market segment and is forecast to grow to USD 117.7 billion in 2021, application infrastructure services (PaaS) is anticipated to grow by a higher margin at 26.6% (see Table). The increased consumption of PaaS is driven by the need for remote workers to have access to high performing, content-rich and scalable infrastructure to perform their duties, which largely comes in the form of modernized and cloud-native applications.
Table: Worldwide Public Cloud Services End-User Spending Forecast (Millions of U.S. Dollars)
BPaaS = business process as a service; IaaS = infrastructure as a service; PaaS = platform as a service; SaaS = software as a service
Note: Totals may not add up due to rounding.
Source: Gartner (November 2020)
“The COVID-19 pandemic forced organizations to quickly focus on three priorities: preserve cash and optimize IT costs, support and secure a remote workforce, and ensure resiliency,” said Nag. “Investing in cloud became a convenient means to address all three of these needs.”
In fact, recent Gartner survey data indicates that almost 70% of organizations using cloud services today plan to increase their cloud spending in the wake of the disruption caused by COVID-19.
As enterprises increase investments in mobility, collaboration, and other remote working technologies and infrastructure, Gartner expects growth in public cloud to be sustained through 2024. The rising trend of cloud service providers partnering with telecommunications companies to extend their reach into the edge and support a hybrid workforce may also lead to further market growth.
“As CIOs think more strategically about how to lay the foundations to support a return to growth, it is clear that the move to digital and associated services will play a big role for organizations in the future,” said Nag. “Cloud adoption therefore becomes a significant means to stay ahead in a post-COVID-19 world focused on agility and digital touchpoints.”