IDC: Global Public Cloud Services Will Reach $195 Billion By 2020

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Between now and 2020, worldwide spending on public cloud services is expected to soar to more than $195 billion, essentially doubling the revenue the industry is expected to generate by the end of this year, according to a new report from IDC.

The report, which the research firm released Aug. 10, is an update to IDC's "Worldwide Semiannual Public Cloud Services Spending Guide," originally published in January. The updated numbers show that the global compound annual growth rate of public cloud services spending will climb 20.4% from 2015 to 2020.

For 2016, public cloud revenue is expected to reach $96.5 billion.

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In Wednesday's report, Benjamin McGrath, IDC's senior research analyst of SaaS and business models, noted:

Cloud software will significantly outpace traditional software product delivery over the next five years, growing nearly three times faster than the software market as a whole and becoming the significant growth driver to all functional software markets. By 2020, about half of all new business software purchases will be of service-enabled software, and cloud software will constitute more than a quarter of all software sold.

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With such rapid growth in public cloud services expected in the coming years, here are some key points that IT professionals may want to monitor based on IDC's findings:

• While software-as-a-service (SaaS) is expected to account for more than two-thirds of the public cloud spending between 2015 to 2019 -- according to the initial January report -- infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS) will each capture a faster growth rate of 27% and 30.6%, respectively.
• The updated report published Wednesday reconfirms that IaaS and PaaS revenues will continue to be the growth leaders in cloud services. IT professionals, as a result, may want to begin exploring and evaluating potential IaaS and PaaS partners that would work well with the company's SaaS vendor. Administrators could also ask their SaaS vendor whether the company offers such a capability, or, as in the case with Salesforce.com, partner with another vendor for such services.
• In addition, PaaS is an area worth noting as it increasingly becomes the focus for many companies' DevOps approach toward rapid business and mobile application development.
• The US will capture nearly two-thirds of all public cloud services revenues over the next five years. Western Europe and the Asia-Pacific region -- excluding Japan -- will follow behind. It is this Asia-Pacific region and Latin America that are poised to grow the fastest over the next five years.
• Banking, discrete manufacturing, and professional services accounted for nearly a third of the spending on global public cloud services in 2016. However, the fastest growth areas leading up to 2020 will be media, retail, and telecommunications.

Eileen Smith, IDC's program director of customer insights and analysis, noted in the report that cloud computing and the flexibility that technology offers is now expanding well beyond traditional enterprises to all businesses:

Cloud computing is breaking down traditional technology barriers as line of business leaders and their IT organizations rely on cloud to flexibly deliver IT resources at the lower cost and faster speed that businesses require. Organizations across all industries are now free to adapt to market changes quicker and take more risks, as they are no longer bound by legacy IT constraints.