FRAMINGHAM, Mass., January, 2018 – Worldwide spending on public cloud services and infrastructure is forecast to reach $160 billion in 2018, an increase of 23.2% over 2017, according to the latest update to the International Data Corporation (IDC) Worldwide Semiannual Public Cloud Services Spending Guide. Although annual spending growth is expected to slow somewhat over the 2016-2021 forecast period, the market is forecast to achieve a five-year compound annual growth rate (CAGR) of 21.9% with public cloud services spending totaling $277 billion in 2021.
The industries that are forecast to spend the most on public cloud services in 2018 are discrete manufacturing ($19.7 billion), professional services ($18.1 billion), and banking ($16.7 billion). The process manufacturing and retail industries are also expected to spend more than $10 billion each on public cloud services in 2018. These five industries will remain at the top in 2021 due to their continued investment in public cloud solutions. The industries that will see the fastest spending growth over the five-year forecast period are professional services (24.4% CAGR), telecommunications (23.3% CAGR), and banking (23.0% CAGR).
“The industries that are spending the most – discrete manufacturing, professional services, and banking – are the ones that have come to recognize the tremendous benefits that can be gained from public cloud services. Organizations within these industries are leveraging public cloud services to quickly develop and launch 3rd Platform solutions, such as big data and analytics and the Internet of Things (IoT), that will enhance and optimize the customer’s journey and lower operational costs,” said Eileen Smith, program director, Customer Insights and Analysis.
Software as a Service (SaaS) will be the largest cloud computing category, capturing nearly two thirds of all public cloud spending in 2018. SaaS spending, which is comprised of applications and system infrastructure software (SIS), will be dominated by applications purchases, which will make up more than half of all public cloud services spending through 2019. Enterprise resource management (ERM) applications and customer relationship management (CRM) applications will see the most spending in 2018, followed by collaborative applications and content applications.
Infrastructure as a Service (IaaS) will be the second largest category of public cloud spending in 2018, followed by Platform as a Service (PaaS). IaaS spending will be fairly balanced throughout the forecast with server spending trending slightly ahead of storage spending. PaaS spending will be led by data management software, which will see the fastest spending growth (38.1% CAGR) over the forecast period. Application platforms, integration and orchestration middleware, and data access, analysis and delivery applications will also see healthy spending levels in 2018 and beyond.
The United States will be the largest country market for public cloud services in 2018 with its $97 billion accounting for more than 60% of worldwide spending. The United Kingdom and Germany will lead public cloud spending in Western Europe at $7.9 billion and $7.4 billion respectively, while Japan and China will round out the top 5 countries in 2018 with spending of $5.8 billion and $5.4 billion, respectively. China will experience the fastest growth in public cloud services spending over the five-year forecast period (43.2% CAGR), enabling it to leap ahead of the UK, Germany, and Japan into the number 2 position in 2021. Argentina (39.4% CAGR), India (38.9% CAGR), and Brazil (37.1% CAGR) will also experience particularly strong spending growth.
The U.S. industries that will spend the most on public cloud services in 2018 are discrete manufacturing, professional services, and banking. Together, these three industries will account for roughly one third of all U.S. public cloud services spending this year. In the UK, the top three industries (banking, retail, and discrete manufacturing) will provide more than 40% of all public cloud spending in 2018, while discrete manufacturing, professional services, and process manufacturing will account for more than 40% of public cloud spending in Germany. In Japan, the professional services, discrete manufacturing, and process manufacturing industries will deliver more than 43% of all public cloud services. The professional services, discrete manufacturing, and banking industries will represent more than 40% of China’s public cloud services spending in 2018.
“Digital transformation is driving multi-cloud and hybrid environments for enterprises to create a more agile and cost-effective IT environment in Asia/Pacific. Even heavily regulated industries like banking and finance are using SaaS for non-core functionality, platform as a service (PaaS) for app development and testing, and IaaS for workload trial runs and testing for their new service offerings. Drivers of IaaS growth in the region include the increasing demand for more rapid processing infrastructure, as well as better data backup and disaster recovery,” said Ashutosh Bisht, research manager, Customer Insights and Analysis.
The Worldwide Semiannual Public Cloud Services Spending Guide quantifies public cloud computing purchases by cloud type for 20 industries and five company sizes across eight regions and 47 countries. Unlike any other research in the industry, the comprehensive spending guide was designed to help IT decision makers to clearly understand the industry-specific scope and direction of public cloud services spending today and over the next five years.
About IDC Spending Guides
IDC’s Spending Guides provide a granular view of key technology markets from a regional, vertical industry, use case, buyer, and technology perspective. The spending guides are delivered via pivot table format or custom query tool, allowing the user to easily extract meaningful information about each market by viewing data trends and relationships.