Published on the 17/10/2017 | Written by Newsdesk
Major vendors dominate rapidly expanding market…
Despite recent news that businesses aren’t all that good at making the most of the cloud, Gartner has released new figures which show double digit growth for worldwide public cloud services, with figures for Australia slightly lagging the rest of the globe. The researcher said the market is projected to grow 18.5 percent in 2017 to total US$260.2 billion, up from US$219.6 billion in 2016.
Locally, the public cloud services market is projected to grow 17.1 percent to total A$5 billion, up from A$4.3 billion in 2016. SaaS revenue is expected to grow 25.1 percent in 2017 to reach A$1.9 billion. The highest revenue growth will come from cloud application infrastructure services (platform as a service – PaaS), which is projected to grow 28.4 percent in 2017 to reach A$262 million (Table 1).
Table 1. Forecast: Public Cloud Services Revenue Forecast, Australia, 2016-2020 (Millions of A$)
| 2016 | 2017 | 2018 | 2019 | 2020 | |
| Cloud Application Services (SaaS) | 1,535 | 1,921 | 2,407 | 3,013 | 3,716 |
| Cloud Application Infrastructure Services (PaaS) | 204 | 262 | 327 | 400 | 481 |
| Cloud System Infrastructure Services (IaaS) | 415 | 475 | 537 | 594 | 650 |
| Cloud Business Process Services (BPaaS) | 814 | 867 | 920 | 982 | 1,047 |
| Cloud Management and Security Services | 195 | 238 | 281 | 331 | 380 |
| Cloud Advertising | 2,596 | 2,883 | 3,214 | 3,567 | 3,967 |
| TOTAL | 4,281 | 5,014 | 5,788 | 6,692 | 7,712 |
Source: Gartner (October 2017)
“Final data for 2016 shows that software as a service (SaaS) revenue was far greater in 2016 than expected, reaching $48.2 billion,” said Sid Nag, Gartner research director in a statement. “SaaS is also growing faster in 2017 than previously forecast, leading to a significant uplift in the entire public cloud revenue forecast.”
SaaS revenue is expected to grow 21 percent in 2017 to reach US$58.6 billion. The acceleration in SaaS adoption can be explained by providers delivering nearly all application functional extensions and add-ons as a service, the market watcher said. This appeals to users because SaaS solutions are engineered to be more purpose-built and are delivering better business outcomes than traditional software is.
“Strategic adoption of platform as a service (PaaS) offerings is also outperforming previous expectations, as enterprise-scale organisations are increasingly confident that PaaS will be their primary form of application development platform in the future,” said Nag. “This accounts for the remainder of the increase in this iteration of Gartner’s public cloud services revenue forecast.”
The highest revenue growth will come from cloud system infrastructure services – that is, infrastructure as a service (IaaS), projected to grow 36.6 percent in 2017 to reach $34.7 billion.
Table 2. Worldwide Public Cloud Services Revenue Forecast (Billions of USD)
| 2016 | 2017 | 2018 | 2019 | 2020 | |
| Cloud Business Process Services (BPaaS) | 39.6 | 42.2 | 45.8 | 49.5 | 53.6 |
| Cloud Application Infrastructure Services (PaaS) | 9.0 | 11.4 | 14.2 | 17.3 | 20.8 |
| Cloud Application Services (SaaS) | 48.2 | 58.6 | 71.2 | 84.8 | 99.7 |
| Cloud Management and Security Services | 7.1 | 8.7 | 10.3 | 12.0 | 13.9 |
| Cloud System Infrastructure Services (IaaS) | 25.4 | 34.7 | 45.8 | 58.4 | 72.4 |
| Cloud Advertising | 90.3 | 104.5 | 118.5 | 133.6 | 151.1 |
| Total Market | 219.6 | 260.2 | 305.8 | 355.6 | 411.4 |
Source: Gartner (October 2017)
Although public cloud revenue is growing faster than initially forecast, Gartner said it still expects growth to even out from 2018 onwards. This stabilisation reflects the increasingly mainstream status and maturity that public cloud services will gain within a wider IT spending mix.
“As of 2016, approximately 17 percent of the total market revenue for infrastructure, middleware, application and business process services had shifted to cloud,” said Nag. “Through 2021, this will increase to approximately 28 percent.”
In terms of vendor share, Gartner expects 70 percent of public cloud services revenue to be dominated by the top 10 public cloud providers through 2021. “In the IaaS segment, Amazon, Microsoft and Alibaba have already taken strong positions in the market,” said Nag. “In the SaaS and PaaS segments, we are seeing cloud’s impact driving major software vendors such as Oracle, SAP and Microsoft from on-premises, license-based software to cloud subscription models.”
