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Business Leaders Drive Shift to Public Cloud in Europe

Cloud computing adoption is a global phenomena. Line of Business (LoB) leaders are at the forefront. Worldwide revenue from public cloud services will reach over $195 billion in 2020, more than doubling the current market size, according to the latest market study by International Data Corporation (IDC).

Western Europe will continue to represent around a fifth of the global market, with revenues growing from a $15 billion in 2015 to $38.6 billion in 2020, at a 20.8 percent five-year compound annual growth rate (CAGR).

Software as a service (SaaS) -- including the service enablement of applications and system infrastructure software -- accounted for 66.9 percent of all public cloud revenue in 2015, and will continue to represent the largest portion in 2020.

Vendor Go-to-Market Approach Evolves

However, according to the IDC assessment, Platform as a Service (PaaS) and Infrastructure as a Service (IaaS) revenues are forecast to grow at a faster rate than SaaS -- expanding their share of the overall market during the forecast period. Cloud vendors are starting to adapt to this shift in demand from buyers.

"The flexibility, low initial cost, and ease of use provided by cloud deployments is reshaping the way companies select and buy new IT solutions. Line of business managers are gaining a central role in selecting IT providers, and the focus across all industries is on how IT can meet specific business objectives," said Serena Da Rold, senior research manager at IDC.

Market segmentation by informed cloud vendors is proven to result in more effective offers. IDC analysts believe that the savvy cloud service providers will stay close to their target industries, strive to understand their business processes and key pain points, in order to offer clients in each segment the solution and features that meet their specific requirements.

Discrete manufacturing, banking, and process manufacturing are the largest spenders, representing nearly 36 percent of cloud revenues in the region. Utilities, insurance, and discrete manufacturing will see the fastest revenue growth in the region over the next five years. However, all 20 industries tracked by IDC will more than double their cloud spending over the forecast period.

Moreover, public cloud services have changed how European organizations evaluate and select software. DevOps related aspects of cloud adoption -- such as very fast deployments, continuous upgrades, and ease of post-implementation reconfiguration -- are now the top criteria for new application purchases.

European Cloud Services Market Outlook

IT buyers in some European countries have started the adoption of public cloud services later than others, due to concerns related to information security, data location, solution availability, and other issues or concerns.

However, IDC foresees that the public cloud movement will sweep across all of Europe and that some markets of cautious adoption will outgrow the others over the next five years.

In Western Europe, IDC predicts that the U.K. will remain the largest market for public cloud services through 2020, generating nearly 30 percent of total revenue in the region. Germany and France follow in terms of size, with the three largest countries representing collectively around 64 percent of total revenue.

Germany will see the strongest growth over the next five years, followed by some of the smaller countries -- such as Ireland, Sweden, and Switzerland -- which will gradually increase their share of the Western European regional market.

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