Breaking Down Cloud Services Spending

Posted by

Jan 29, 2016 5:12:23 PM

Google Logo
Breaking Down Cloud Services Spending

Cloud computing has become one of the more common targets of corporate investments in the past few years, and spending behaviors are shifting somewhat as time goes on thanks to the evolution of business IT. The number and diversity of organizations that do not leverage cloud services for a range of processes and needs are decreasing rapidly. Unified communications, application deployments, infrastructure and other core aspects of collaboration and IT are all moving rapidly into the cloud. 

Despite already experiencing prolific growth in the past 10 years, public and private cloud spending are still increasing at a healthy pace, and this is expected to continue to be the case for the foreseeable future. Business needs have changed quite a bit of late, especially when it comes to information and communications technologies, and chances are the evolution of marketplaces will completely transform the ways in which IT spending is handled among all companies. 

Leaders need to keep up with trends in their industries, as well as how those shifts are impacting end-user expectations and preferences, as a failure to do so could lead to significant decreases in engagement, productivity and efficiency. Thanks to the agility and ease of use of the cloud, though, a strong foundation in these environments can make it far easier and more affordable to make necessary changes to infrastructure, platforms, software and more. 

If you want a quick rundown of some of the spending statistics that define the major trends taking place in the United States, check out this video from Biren Shukla:

Perhaps the most important factor in this discussion relates to the increasing recognition of the benefits of specializing cloud computing adoption and deployments to suit the specific needs and objectives of each individual company. As more firms start to understand how to best align investments with core goals and requirements, the market will continue to expand and evolve in a way that bolsters corporate performances across the board. 

All categories growing
Gartner recently released a report on the public cloud services industry that broke the marketplace down into its various subsets and analyzed where corporate dollars are going in this regard. Perhaps not all that surprisingly, Software as a Service remained the largest category out of the three main solutions offered, with infrastructure and platform closing out that particular trio. 

SaaS saw 15.5 percent growth in 2015, and stood at a total size of $31.4 billion in expenditures throughout that 12-month period, while it is now expected to expand a bit more quickly in 2016 at a pace of 20.3 percent. This would bring that market segment to a total size of $37.7 billion in spending this year. Infrastructure-as-a-Service saw 31.9 percent growth in 2015 to a reach a size of $16.2 billion, and Gartner predicted spending to rise by 38.4 percent this year, reaching a size of $22.4 billion globally. 

Platform-as-a-Service is likewise forecast to grow significantly in the next 12 months at a pace of 21.1 percent and see $4.6 billion in spending. Interestingly, the two largest overall spending categories were Business Process-as-a-Service with $39.2 billion in spending last year and a predicted $42.6 billion in 2016, and cloud advertising with $79.4 billion in spending in 2015 and $90.3 billion this year. 

"The market for public cloud services is continuing to demonstrate high rates of growth across all markets and Gartner expects this to continue through 2017," Gartner Research Director Sid Nag explained. "This strong growth continues reflect a shift away from legacy IT services to cloud-based services, due to increased trend of organizations pursuing a digital business strategy."

Cloud investments are accelerating in each category of the market. Cloud investments are accelerating in each category of the market.

Overall, the market for public cloud services saw 13.7 percent growth in 2015 and will accelerate to 16.5 percent in 2016, reaching $203.9 billion in spending through the end of the year. 

What has been the most consistent trend, though, is the fact that IaaS is growing far more quickly than any other component, and will continue to lead the pack in this regard for the foreseeable future. 

"IaaS continues to be the strongest-growing segment as enterprises move away from data center build-outs and move their infrastructure needs to the public cloud," Nag noted. "Certain market leaders have built a significant lead in this segment, so providers should focus on creating differentiation for success."

Now, while this report looked at the global scope of cloud services spending, others have focused in on more specific sectors and the investment behaviors that are gaining some traction therein. 

"Enterprises are looking to improve cybersecurity performances."

Utilities companies focus on protection
International Data Corporation took a look at the utilities industry, specifically firms that compete in Western Europe, to analyze how these firms are approaching the cloud computing market. Somewhat surprisingly, it appears as though utilities enterprises are looking to enhance their cybersecurity performances this year through expanded investments in cloud computing technologies and similar as-a-Service models. 

According to the analysts, overall spending on software in the industry will be around $3.2 billion this year, and the lion's share of those investments will be directed toward mobility device management, cloud protection and data loss prevention solutions. The firms are also expected to put a higher volume of budget into customer-facing software services and enterprise resource management. 

Perhaps not surprisingly, the Internet of Things will play a factor in spending this year. 

"With smart meter deployments picking up again in countries such as France and the U.K., Western European utilities will focus their IT solution investment potential on adopting new MDM solutions and, to a lesser extent, on enhancing/upgrading their existing MDM solutions in the next 12 months," Gaia Gallotti, research manager of IDC's Energy Insights division, explained. "Interestingly, this applies to water utilities as well."

Chances are spending in the American utilities market will be similar, and organizations in every sector of the globe can likely find value in similar investments that work to protect against data breach and improve user experiences through more robust cloud computing deployments. 

Topics: Cloud Trends