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IT Cloud Services Spending to More Than Double by 2017

Spending on public IT cloud services worldwide is expected to jump from an estimated $47.4 billion in 2013 to $107 billion by 2017.

That’s one finding in the latest research from International Data Corporation (IDC), which predicts the market to have a compound annual growth rate (CAGR) of 23.5 percent, five times the number of the IT industry.

Cloud computing has proved to play an important role in the way companies consume and use information technology. With nearly the entire technological industry shifting to cloud computing, a “Chapter Two” phase may be upcoming, IDC says. In this second phase, cloud adoption will be more user- and solution-driven, and be bigger than before. Along with other third-platform technologies (mobile, social and “big data”), cloud computing will become more interdependent as it will continue to spread across to all industries that depend on IT.

“In this second phase of cloud development, it will be essential for cloud service providers to reexamine their cloud strategies, preparing for a marketplace focused intensely on business innovation, industry transformation, and increasingly pressured pricing operating models,” said Frank Gens, SVP and chief analyst at IDC. “How supplies navigate the next two years will tell us a lot about who the IT market leaders will be for the next two decades.”

Cloud deployment options play a huge and important role in expanding public IT cloud services, the report says. With options expanding, cloud services are quickly becoming a top choice for companies. The virtual private cloud (VPC) has also helped in shifting momentum from dedicated private cloud offerings to public cloud offerings. By mixing in characteristics of the public cloud (economies, scale, pace of innovation) alongside the privacy and control features with the private cloud, VPC’s are addressing the criticisms that customers originally had with the cloud model, IDC said.

By 2017, cloud services will represent 17 percent of IT product spending and nearly half of all growth in applications, system infrastructure, software, platform as a service (PaaS), servers and basic storage. Software as a Service (SaaS), which is expected to bring in nearly 60 percent of total revenue in 2017, will continue to be the largest public IT cloud services category. Meanwhile, PaaS and Infrastructure as a Service (IaaS) will be the fastest growing categories with respective CAGRs of about 30 percent and 27 percent.

The United States will keep its spot as the largest public IT cloud services market, even with a decline in its share. IDC expects the share will drop from 57 percent in 2013 to 44 percent in 2017. Western Europe, Latin America and Asia-Pacific will each gain shares through the four-year forecast. With a CAGR of about 37 percent during the same four-year period, cloud spending in emerging markets is growing at a rate twice that of developed markets, IDC said.

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