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Public cloud spending skyrockets as SaaS shines

Public cloud spending skyrockets as SaaS shines

Hyper-scale cloud providers widely expected to increase market dominance

The worldwide public cloud services market is projected reach US$186.4 billion in 2018, growing 21.4 per cent as customers increase software-as-a-service (SaaS) deployments.

According to Gartner findings, SaaS remains the largest segment of the cloud market, with revenue expected to grow 22.2 per cent to reach US$73.6 billion during the next 12 months.

Looking ahead, the analyst firm expects SaaS to reach 45 per cent of total application software spending by 2021.

“In many areas, SaaS has become the preferred delivery model,” Gartner research director, Sid Nag, said. “Now SaaS users are increasingly demanding more purpose-built offerings engineered to deliver specific business outcomes.”

Meanwhile, the fastest-growing segment of the market is cloud system infrastructure services (infrastructure-as-a-service or IaaS), which is forecast to grow 35.9 per cent in 2018 to reach US$40.8 billion.

As a result, Gartner expects the top 10 providers to account for nearly 70 per cent of the IaaS market by 2021, up from 50 per cent in 2016.

“The increasing dominance of the hyper-scale IaaS providers creates both enormous opportunities and challenges for end users and other market participants,” Nag added.

“While it enables efficiencies and cost benefits, organisations need to be cautious about IaaS providers potentially gaining unchecked influence over customers and the market.

“In response to multi-cloud adoption trends, organisations will increasingly demand a simpler way to move workloads, applications and data across cloud providers' IaaS offerings without penalties.”

Within the platform-as-a-service (PaaS) category, the fastest-growing segment is database platform-as-a-service (dbPaaS), expected to reach almost $10 billion by 2021.

According to Nag, hyper-scale cloud providers are increasing the range of services they offer to include dbPaaS.

“Although these large vendors have different strengths, and customers generally feel comfortable that they will be able to meet their current and future needs, other dbPaaS offerings may be good choices for organisations looking to avoid lock-in,” Nag added.

Although public cloud revenue is growing more strongly than initially forecast, Gartner still expects growth rates to stabilise from 2018 onward, reflecting the increasingly mainstream status and maturity that public cloud services will gain within a wider IT spending mix.

This forecast excludes cloud advertising, which was removed from Gartner's public cloud service forecast segments in 2017.


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