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Global Public Cloud Revenue to Grow 17% in 2020: Gartner

Software as a service (SaaS) will remain the largest market segment, which is forecast to grow to $116 billion next year due to the scalability of subscription-based software, according to Gartner.

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Sid Nag, Gartner
Sid Nag, Gartner

The worldwide public cloud services market is expected to grow 17% in 2020 to total $266.4 billion, up from $227.8 billion in 2019, according to Gartner.

“At this point, cloud adoption is mainstream,” said Sid Nag, Research VP at Gartner. “The expectations of the outcomes associated with cloud investments therefore are also higher. Adoption of next-generation solutions are almost always ‘cloud-enhanced’ solutions, meaning they build on the strengths of a cloud platform to deliver digital business capabilities.”

Software as a service (SaaS) will remain the largest market segment, which is forecast to grow to $116 billion next year due to the scalability of subscription-based software (see Table 1). The second-largest market segment is cloud system infrastructure services, or infrastructure as a service (IaaS), which will reach $50 billion in 2020. IaaS is forecast to grow 24% year over year, which is the highest growth rate across all market segments. This growth is attributed to the demands of modern applications and workloads, which require infrastructure that traditional data centres cannot meet.

 Table 1. Worldwide Public Cloud Service Revenue Forecast (Billions of U.S. Dollars)

  2018 2019 2020 2021 2022
Cloud Business Process Services (BPaaS) 41.7 43.7 46.9 50.2 53.8
Cloud Application Infrastructure Services (PaaS) 26.4 32.2 39.7 48.3 58.0
Cloud Application Services (SaaS) 85.7 99.5 116.0 133.0 151.1
Cloud Management and Security Services 10.5 12.0 13.8 15.7 17.6
Cloud System Infrastructure Services (IaaS) 32.4 40.3 50.0 61.3 74.1
Total Market 196.7 227.8 266.4 308.5 354.6

Note: Totals may not add up due to rounding. Source: Gartner (November 2019)

Various forms of cloud computing are among the top three areas where most global CIOs will increase their investment next year, according to Gartner. As organisations increase their reliance on cloud technologies, IT teams are rushing to embrace cloud-built applications and relocate existing digital assets. “Building, implementing and maturing cloud strategies will continue to be a top priority for years to come,” said Nag.

 “The cloud managed service landscape is becoming increasingly sophisticated and competitive. In fact, by 2022, up to 60% of organisations will use an external service provider’s cloud managed service offering, which is double the percentage of organisations from 2018,” said Nag. “Cloud-native capabilities, application services, multi-cloud and hybrid cloud comprise a diverse cloud ecosystem that will be important differentiators for technology product managers. Demand for strategic cloud service outcomes signals an organisational shift toward digital business outcomes.”

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