Catalyzed by COVID, Public Cloud Spending to Reach USD 692 Bn by 2025!

By Veritis

Public Cloud Spending to Reach USD 692 Bn by 2025

The pandemic, and the consequent economic downturn, have prompted many IT companies to accelerate their move to the cloud. Reason? Cloud enables the much-needed agility and scalability that companies require to weather this storm effectively. The result is the unprecedented global appetite for public cloud services.

According to the latest forecast from Gartner, Inc., the global end-user spending on public cloud services is anticipated to increase by 23.1% in 2021 to reach USD 332.3 billion, up from USD 270 billion in 2020.

“The events of last year allowed CIOs to overcome any reluctance of moving mission-critical workloads from on-premises to the cloud. Emerging technologies such as containerization, virtualization, and edge computing are becoming more mainstream and driving additional cloud spending,” said Sid Nag, research vice president at Gartner.

“Simply put, the pandemic served as a multiplier for CIOs’ interest in the cloud.”

Gartner also underscored that the surge in public cloud adoption triggered by the pandemic this year will continue through to 2025.

The world’s leading research company forecast that the global public cloud end-user spending will reach USD 692.1 billion in 2025 from USD 242.6 billion in 2019, propelling at a CAGR of 16.1% during the forecast period.

Other key insights from Gartner’s report: Forecast: Public Cloud Services, Worldwide, 2019-2025, includes the following:

Despite pandemic headwinds, the demand for public cloud service offerings, SaaS, IaaS, PaaS, and DaaS, is growing tremendously.

Global Public Cloud Services End-User Spending (Billions of US Dollars)

Cloud Offerings 2020 2021 2022
Cloud Business Process Services (BPaaS) 46.1 50.1 53.1
Cloud Application Infrastructure Services (PaaS) 46.3 59.4 71.5
Cloud Application Services (SaaS) 102.7 122.6 145.3
Cloud Management and Security Services 14.3 16.0 18.0
Cloud System Infrastructure Services (IaaS) 59.2 82.0 106.8
Desktop as a Service (DaaS) 1.2 2.0 2.6
Total Market 270.0 332.3 397.4

SaaS Leads the Public Cloud Market

Software as a service (SaaS) remains the dominant market segment in 2020, making up 36% of all public cloud services revenue. SaaS end-users spending stood at USD 102.7 billion in 2020 and is forecast to reach USD 122.6 billion in 2021 and USD 145.3 billion by 2022. The surge in demand for SaaS can be attributed to the burgeoning adoption of SaaS-based Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) systems.

The CRM is the leading SaaS segment, poised to grow from USD 44.7 billion in 2019 to USD 99.7 billion in 2025, at a CAGR of 12.14%. Likewise, ERP is the second most popular type of SaaS application. Gartner predicts that the SaaS-based ERM revenue will jump from USD 15.7 billion in 2019 to USD 35.8 billion in 2025, at a CAGR of 12.42%.

Meanwhile, Infrastructure as a Service (IaaS) is anticipated to witness the highest revenue gain by a cloud service in 2021, with end-user spending increasing USD 22.7 billion this year. It is followed by Platform as a Service (PaaS), with a revenue gain of USD 13.1 billion in 2021.

SaaS Leads the Public Cloud Market

DaaS to Witness Highest Growth

Desktop as a Service (DaaS) is expected to see a revenue growth of 67% in 2021, the highest among all the public cloud service offerings. IaaS follow it with a growth rate of 38.5% this year. PaaS is projected to see a 28.3% jump in revenue, while SaaS, the largest revenue contributing segment of public cloud spending, is expected to grow 19.3% this year.

DaaS to Witness Highest Growth

“It’s important to note that the usage and adoption of cloud that served enterprises well during the ongoing crisis will not look the same in the coming years,” said Nag.

“It will further evolve from serving pedestrian use cases such as infrastructure and application migration, to those that combine cloud with technologies such as AI, IoT, 5G and more.”

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

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