By 2020 Cloud Adoption To Impact 50 pc ITO Deals

by CXOtoday News Desk    Feb 22, 2017

cloud

The overall global public cloud market is entering a period of stabilization, with its growth rate peaking at 18 percent in 2017 and then tapering off over the next few years, predicts research firm Gartner. At present, while some organizations are still figuring out where cloud actually fits in their overall IT strategy, an effort to cost optimize and bring forth the path to transformation holds strong promise and results for IT outsourcing (ITO) buyers. As Gartner predicts that through 2020, cloud adoption strategies will influence more than 50 percent of IT outsourcing deals.

The public cloud services market is projected to touch total $246.8 billion in 2017, up from $209.2 billion in 2016, according to Gartner. The highest growth will come from cloud system infrastructure services (infrastructure as a service [IaaS]), which is projected to grow 36.8 percent in 2017 to reach $34.6 billion. Cloud application services (software as a service [SaaS]) is expected to grow 20.1 percent to reach $46.3 billion, it said.

“Organizations are pursuing strategies because of the multidimensional value of cloud services, including values such as agility, scalability, cost benefits, innovation and business growth,” said Sid Nag, research director at Gartner. “While all external-sourcing decisions will not result in a virtually automatic move to the cloud, buyers are looking to the ‘cloud first’ in their decisions, in support of time-to-value impact via speed of implementation.”

Worldwide Public Cloud Services Forecast (Millions of Dollars)

 

2016

2017

2018

2019

2020

Cloud Business Process Services (BPaaS)

40,812

43,772

47,556

51,652

56,176

Cloud Application Infrastructure Services (PaaS)

7,169

8,851

10,616

12,580

14,798

Cloud Application Services (SaaS)

38,567

46,331

55,143

64,870

75,734

Cloud Management and Security Services

7,150

8,768

10,427

12,159

14,004

Cloud System Infrastructure Services (IaaS)

25,290

34,603

45,559

57,897

71,552

Cloud Advertising

90,257

104,516

118,520

133,566

151,091

Total Market

209,244

246,841

287,820

332,723

383,355

Source: Gartner (February 2017)

The SaaS market is expected to see a slightly slower growth over the next few years with increasing maturity of SaaS offerings, namely human capital management (HCM) and customer relationship management (CRM) and the acceleration in the buying of financial applications. Nevertheless, SaaS will remain the second largest segment in the global cloud services market.

“As enterprise application buyers are moving toward a cloud-first mentality, we estimate that more than 50 percent of new 2017 large-enterprise North American application adoptions will be composed of SaaS or other forms of cloud-based solutions,” said Nag. “Midmarket and small enterprises are even further along the adoption curve. By 2019, more than 30 percent of the 100 largest vendors’ new software investments will have shifted from cloud-first to cloud-only.”

Gartner predicts more cloud growth in the infrastructure compute service space as adoption becomes increasingly mainstream. Additional demand from the migration of infrastructure to the cloud and increased demand from increasingly compute-intensive workloads (such as artificial intelligence [AI], analytics and Internet of Things [IoT]) — both in the enterprise and startup spaces — are driving this growth. Furthermore, the growth of platform as a service (PaaS) is also driving the growth in adoption of IaaS.