Wednesday, September 22, 2021

Global Spending on Public Cloud by End Users to Grow 23% in 2021

STAMFORD, Conn. — Public cloud spending by end-user organizations is expected to grow to $332 billion in 2021 — a 23% increase from $270 billion in 2020, according to a recent forecast.

The forecast, “Public Cloud Services, Worldwide, 2019-2025, 1Q21 Update,” by the market research and advisory firm Gartner says end-user spending on the public cloud is being driven by IT shifts from the COVID-19 pandemic and other technologies, such as containerization, virtualization and edge computing. It was released last month.

Offerings in the public cloud marketplace that deliver or support cloud services are experiencing “tremendous growth,” despite “macroeconomic headwinds,” according to Gartner.

Software as a service (SaaS) is the largest market segment and projected to grow 20% from $102 billion in 2020 to $122 billion in 2021, due partly to demand for “composable” applications that require “a different type of SaaS experience.” 

A composable business is defined by Gartner as one based on “architecting for resilience and accepting that disruptive change is the norm.” They exploit digital disruptions by being modular and “mixing and matching business functions to orchestrate the proper outcomes.”

At the corporate board level, 69% of directors wanted to “accelerate enterprise digital strategies and implementations to help deal with the ongoing disruption,” according to a Gartner survey last year. Some enterprises’ digital strategies became real “for the first time,” and others are “rapidly scaling digital investments.”

“Composable business is a natural acceleration of the digital business that organizations live every day,” said Daryl Plummer, distinguished research VP, chief of research and fellow, Gartner.

The desktop-as-a-service (DaaS) and infrastructure-as-a-service (IaaS) market segments will see the highest growth rates in 2021, with DaaS increasing 67% from $1.2 billion in 2020 to $2 billion in 2021 and IaaS increasing 38% from $59 billion in 2020 to $82 billion in 2021.

Growth in these segments will come from CIOs who face “continued pressures” to scale infrastructure that can support moving workloads to the cloud and hybrid workforce demands.

In terms of hybrid work, 82% of business leaders intended to “permit remote working some of the time” as employees return to the workplace, according to a Gartner survey last year. Amid the cloud-based shift, 13% of business leaders voiced concerns over sustaining productivity. 

See more: Top 75 SaaS Companies of 2021

Worldwide public cloud services end-user spending forecast

(Millions of U.S. dollars)

Public Cloud Service

2020

2021

2022

Cloud Business Process Services (BPaaS) 46,131 50,165 53,121
Cloud Application Infrastructure Services (PaaS) 46,335 59,451 71,525
Cloud Application Services (SaaS) 102,798 122,633 145,377
Cloud Management and Security Services 14,323 16,029 18,006
Cloud System Infrastructure Services (IaaS) 59,225 82,023 106,800
Desktop as a Service (DaaS) 1,220 2,046 2,667
Total Market 270,033 332,349 397,496

BPaaS = business process as a service; IaaS = infrastructure as a service; PaaS = platform as a service; SaaS = software as a service. Source: Gartner.

See more: Top Cloud Service Providers & Companies of 2021

“The events of last year allowed CIOs to overcome any reluctance of moving mission-critical workloads from on premises to the cloud,” said Sid Nag, research VP, Gartner. 

“Even absent the pandemic, there would still be a loss of appetite for data centers. Simply put, the pandemic served as a multiplier for CIOs’ interest in the cloud.”

The majority of board directors (67%) expected budgetary increases in technology as a result of the pandemic, with a nearly 7% increase on average. Most of the board directors (86%) deemed technology as having a transformational role in addressing strategic business priorities.

“Technology-driven digital transformation can, and should be, a strong enabler in addressing employee, customer, supply chain and broad brand impact to position the enterprise to come out of the crisis stronger,” said Partha Iyengar, distinguished research VP, Gartner.

For instance, organizations mobilizing to produce and distribute COVID-19 vaccinations are using SaaS applications for essential functions, such as automation and supply chain. These SaaS applications help scale vaccine management.

However, the adoption and usage of the public cloud that served enterprises well during the pandemic will “not look the same in the coming years,” Nag said. 

Public cloud usage will evolve from “pedestrian use cases,” such as infrastructure and application migration, to combine the cloud with other technologies, such as artificial intelligence (AI), the Internet of Things (IoT) and 5G, according to Nag.

“In other words, cloud will serve as the glue between many other technologies that CIOs want to use more of, allowing them to leapfrog into the next century as they address more complex and emerging use cases,” Nag said. 

“It will be a disruptive market, to say the least.”

Overall, spending on IT across industries is expected to grow 8% from $3.7 trillion in 2020 to $4 trillion in 2021.

See more: How to Better Manage Your Cloud Costs

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