Global spending on public cloud services will reach $195 billion by 2020, according to the latest forecast from International Data Corporation (IDC). The Worldwide Semiannual Public Cloud Services Spending Guide, published Wednesday, forecasts $96.5 billion of spending this year, and a 20.4 percent compound annual growth rate from 2015 to 2020.
The report shows that 16.3 percent of public cloud spending in 2015 was on IaaS, with cloud software accounting for the remaining 83.7 percent. It further divides cloud software into applications-as-a-service and system infrastructure software (SIS), which make up SaaS, and application development and deployment (AD&D), also known as PaaS. Infrastructure and platform revenues are expected to grow faster, however, than SaaS.
“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,” said Benjamin McGrath, senior research analyst for SaaS and Business Models at IDC. “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.”
“Discrete” manufacturing (meaning manufacturing of countable finished products), banking, and professional services are the industries leading public cloud spending, representing a third of the total in 2016. All 20 industries studied, however, will more than double in revenue generated for providers over the study’s 5-year term, and media, telecommunications, and retail will lead spending growth.
The US will remain the leading regional market for public cloud revenues, while the greatest revenue growth will be in Latin America and Asia-Pacific excluding Japan. As among industries, spending in all 8 regions will grow by over 100 percent.
In 2013 IDC forecasted public cloud spending would reach $47.4 billion in that year, and $107 billion in 2017, which fits observed spending and continuing trends well enough to lend additional credence to the forecasts released this week.
The report is also generally supported by research released by Synergy in 2015 that showed managed enterprise services making up over half of close to $22 billion in quarterly revenue, and an IDC report from earlier this year which showed infrastructure sales to public cloud reached $4.6 billion in Q3 2015.