​SaaS dominates as Public Cloud services spending skyrockets

​SaaS dominates as Public Cloud services spending skyrockets

“By 2018, most software vendors will have fully shifted to a SaaS/PaaS code base."

Worldwide spending on public cloud services will grow at a 19.4 percent compound annual growth rate (CAGR) - almost six times the rate of overall IT spending growth - from nearly $US70 billion in 2015 to more than $US141 billion in 2019.

The new spending guide by IDC suggests that Software-as-a-Service (SaaS) will remain the dominant cloud computing type, capturing more than two thirds of all public cloud spending through most of the forecast period.

Worldwide spending on Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) will grow at a faster rate than SaaS however, with five-year CAGRs of 27.0 percent and 30.6 percent, respectively.

“Over the past several years, the software industry has been shifting to a cloud-first (SaaS) development and deployment model,” says Frank Gens, Senior Vice President and Chief Analyst, IDC.

“By 2018, most software vendors will have fully shifted to a SaaS/PaaS code base. This means that many enterprise software customers, as they reach their next major software upgrade decisions, will be offered SaaS as the preferred option.

“Put together, new solutions born on the cloud and traditional solutions migrating to the cloud will steadily pull more customers and their data to the cloud.”

From a company size perspective, Gens believes large and very large companies will be the primary driver of worldwide public cloud services with spending of more than $US80 billion in 2019.

However, small and medium businesses (SMBs) will remain a significant contributor to overall spending with more than 40 percent of the worldwide total throughout the forecast period coming from companies with fewer than 500 employees.

Industry specific

The industries with the largest public cloud services expenditures in 2015 were discrete manufacturing at $US8.6 billion, followed by banking and professional services at $US6.8 billion and $US6.6 billion, respectively.

By 2019, Gens says professional services is forecast to move ahead of banking into the number two position worldwide.

As Gens explains, these three industries were also the public cloud services spending leaders in the Americas and in Europe, Middle East, and Africa (EMEA) in 2015.

However, telecommunications was the second largest industry in the Asia/Pacific region and is forecast to move into the top position by 2019.

For Gens, telecommunications will be the fastest-growing vertical industry over the 2014-2019 forecast period with a worldwide CAGR of 22.2 percent.

The following industries will also experience five-year CAGRs greater than 20 percent: media, state/local government, education, retail, transportation, and resource industries.

“Cloud services will remain the essential foundation of the IT industry's 3rd Platform of innovation and growth,” adds Eileen Smith, Program Director, Customer Insights and Analysis, IDC.

“As the cloud market enters an 'innovation stage', there will be an explosion of new solutions and value creation on top of the cloud.

“Industry-specific applications will be a driving force as businesses look for solutions that can be easily configured to their unique business and vertical requirements.

“With the huge increase in the number and diversity of services available in the market, organisations across the industries will shift steadily toward cloud-first strategies to enable digital transformation.”

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