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Worldwide Public Cloud Market Reaches $208.6 Billion

Cloud computing application demand is growing, but challenges remain. According to the latest market study by Gartner, the worldwide public cloud computing market is projected to grow 17.2 percent in 2016 to reach $208.6 billion -- that's up from $178 billion in 2015.

The highest growth will come from cloud system infrastructure services (IaaS), which are projected to grow 42.8 percent in 2016. Cloud application services (SaaS), one of the largest segments in the global cloud services market, is forecast to grow 21.7 percent during 2016 to reach $38.9 billion.

Growth of public cloud is partly because organizations are saving 14 percent of their IT budgets as an outcome of public cloud adoption. However, the typical CIO aspiration for using cloud services outpaces actual adoption.

Ongoing Market Development Challenges

Gartner believes that while many organizations have assessed the need for cloud services, they resist the change. In fact, a large number of organizations still have no current plans to use any cloud services.

IT modernization is currently the top driver of public cloud adoption, followed by cost savings, innovation, agility and other benefits. The focus on IT modernization indicates a more sophisticated and strategic use of public cloud services.

According to the Gartner assessment, public cloud services are being used to recognize the tactical benefits of IT cost savings, and they are also being used to establish a more strategic IT environment -- i.e. one that can serve as a foundation for digital business transformation.

That being said, security and/or privacy concerns continue to be the top inhibitors to public cloud adoption -- despite the strong security track record and increased transparency of leading public cloud service providers.

More education is needed to help organizations overcome their perceived security concerns. This should be a key area of focus for IT infrastructure vendors and cloud service providers that offer professional guidance.

Hybrid Cloud and Multi-Cloud Brokerage

Most organizations use a combination of cloud services from different providers. While public cloud usage will continue to increase, the use of private cloud and hosted private cloud services will also increase through 2017.

The use of multiple public cloud providers, plus growth in various types of private cloud services, will create a multi-cloud environment in most enterprises and a need to coordinate cloud usage using hybrid cloud platforms.

Although these hybrid cloud scenarios will dominate, Gartner says adoption of Hybrid IT is a work in progress. Many organizations need vendor guidance on their 'systems of record' integration challenges, application incompatibilities, a perceived lack of management tools and a lack of common APIs.

"Of course in the case of hybrid cloud, these top concerns also highlight some of the top opportunities for providers," said Ed Anderson, research vice president at Gartner. "Therefore, vendors must focus on the top challenges to be successful in meeting the growing demand for hybrid cloud solutions."

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