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Wednesday, January 27, 2016

Cloud-First Strategies are Driving Public Service Adoption

More enterprises are adopting a cloud-first strategy, taking advantage of the speed and agility of cloud computing for infrastructure, platforms and application services. Some nations now have a national movement. Case in point: many South Korean companies have a public cloud-first strategy, with 70 percent of IT organizations reporting an increase in cloud service investments through 2017.

As demand blossoms, the worldwide public cloud services market is projected to grow by 16.5 percent in 2016, reaching a total of $204 billion -- that's up from $175 billion in 2015, according to the latest global market study by Gartner.

According to the Gartner assessment, the highest increase in cloud adoption will come from Infrastructure-as-a-service (IaaS), which is projected to grow by 38.4 percent in 2016.

Cloud advertising, the largest segment of the global cloud services market, is expected to grow 13.6 percent in 2016 to reach $90.3 billion (see Table 1, click to enlarge).


"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," said Sid Nag, research director at Gartner.

Gartner analysts believe that this strong growth continues reflect a shift away from legacy IT services to cloud-based services, due partly to the trend of more organizations pursuing a digital business transformation strategy.

Continued Public Cloud Market Development

Gartner predicts that the IaaS segment will remain the fastest-growing public cloud services sector in 2016, currently forecast to reach $22.4 billion.

"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," said Mr. Nag. "Certain market leaders have built a significant lead in this segment, so providers should focus on creating differentiation for success."

Cloud Software-as-a-Service (SaaS) is forecast to grow 20.3 percent in 2016, to reach $37.7 billion. As more software vendors shift their business models from traditional on-premises licensed software to public cloud-based subscription offerings, this trend will likely continue to accelerate.

In addition, the entry of some major legacy software vendors into the public cloud market last year will fuel further growth of the SaaS market, in the coming years. Moreover, hybrid cloud services that are focused on specific vertical industry applications will continue to have a bright outlook.