The Dedicated (Local) Cloud Infrastructure-as-a-Service Market Will Grow Revenues More Than 100x Over the Next Five Years, According to IDC

NEEDHAM, Mass. – Digital transformation (DX) is one of the trends shaping the enterprise world and driving the investments organizations are making to modernize their IT infrastructures and processes. Migration to service-based IT is one of the significant elements of DX initiatives as it enables organizations to utilize IT more efficiently for achieving business goals, pursuing new opportunities, and enhancing customer experience. Until recently, service-based IT was largely associated with public cloud services. However, in the past 18 months, a number of system vendors and cloud service providers have introduced a new class of offerings that are designed to bring cloud experience to enterprise premises.

Dedicated (Local) Cloud Infrastructure-as-a-Service (DCIaaS) solutions deliver compute and/or storage resources dedicated to an individual customer that are deployed on customer premises and consumed as a service. This model is essentially a dedicated version of a publicly available cloud offering, modified to run on premises or in a specially certified colocation environment, including outside of a traditional datacenter environment (edge). The cloud service provider retains full ownership of all underlying infrastructure hardware and software and is completely responsible for delivery, maintenance, updating, and ultimate disposal of the asset when the subscription is terminated.

In its recently published report, Dedicated Cloud Infrastructure as a Service, 2019–2025: Market Trends and Outlook (IDC #US48005321), IDC estimates that the worldwide annual recurring revenues (ARR) from dedicated (local) cloud infrastructure as a service offerings for compute and storage will increase from $138 million in 2020 to $14 billion in 2025 with a compound annual growth rate (CAGR) of 151.8%. The DCIaaS solutions will be consumed by both enterprise customers and by hosted service providers, which use infrastructure for delivering cloud service to their customers.

“Increasing demand for service-based consumption of IT resources triggered a broad move within the system vendor community to introduce a variety of offerings to fulfill this demand,” said Natalya Yezhkova, research vice president, IT Infrastructure practice. “With dedicated cloud as-a-service solutions, enterprises have an opportunity to bring all of what they like about public cloud to their own premises while mitigating restrictions and concerns they have with moving infrastructure off-premises.”