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Friday, December 11, 2020

Ongoing Migration of Enterprise Software to the Cloud

The traditional enterprise software landscape has evolved significantly over the last decade. CTOs and line of business leaders look to online service offerings that deliver functionality via a usage-based pricing model. It's often the fastest path to demo application software and determine user acceptance.

Furthermore, while new agile software development methodologies have replaced legacy waterfall approaches that were common during the mainframe and client-server computing era, today's app developers seek on-demand IT infrastructure solutions that they can easily provision and deploy themselves.

Worldwide end-user spending on public cloud services is forecast to grow 18.4 percent in 2021 to total $304.9 billion -- that's up from $257.5 billion in 2020, according to the latest market study by Gartner.

Public Cloud End-User Market Development

"The pandemic validated cloud’s value proposition," said Sid Nag, vice president at Gartner. "The ability to use on-demand, scalable cloud models to achieve cost efficiency and business continuity is providing the impetus for organizations to rapidly accelerate their digital business transformation plans."

Moreover, the increased use of public cloud services across the global enterprise IT marketplace has reinforced cloud computing adoption as the preferred way to rapidly deploy business software applications at scale.

The proportion of IT spending that is shifting to cloud services will accelerate in the aftermath of the COVID-19 pandemic crisis, with cloud computing projected to make up 14.2 percent of the total global enterprise IT spending market in 2024, up from 9.1 percent in 2020.

Although software as a service (SaaS) remains the largest market segment and is forecast to grow to $117.7 billion in 2021, application infrastructure services (PaaS) are anticipated to grow by a higher margin at 26.6 percent.

The increased consumption of PaaS is driven by the need for remote workers to have access to high- performance and scalable infrastructure to complete their duties, which typically comes in the form of modernized and cloud-native software applications.

"The COVID-19 pandemic forced organizations to quickly focus on three priorities: preserve cash and optimize IT costs, support and secure a remote workforce, and ensure resiliency," said Mr. Nag. "Investing in cloud became a convenient means to address all three of these needs."

In fact, recent Gartner survey data indicates that almost 70 percent of enterprise organizations using cloud services today plan to increase their cloud spending in the wake of the economic disruption caused by the COVID-19 pandemic.

As enterprises increase investments in mobility, collaboration, and other remote working technologies and infrastructure, Gartner expects growth in public cloud services to be sustained through 2024.

The rising trend of hyperscale cloud service providers partnering with telecommunications companies to extend their reach into the edge computing arena, plus support for a flexible 'hybrid workforce' model, may also lead to further cloud market growth.

Outlook for Public Cloud Service Applications Growth 

"As CIOs think more strategically about how to lay the foundations to support a return to growth, it is clear that the move to digital and associated services will play a big role for organizations in the future," said Mr. Nag.

According to the Gartner assessment, cloud service adoption will become a significant means to stay ahead in a post-COVID-19 world focused on business agility and digital service touchpoints.

Looking ahead, I believe that we can anticipate CEOs will continue to seek ways to gain a competitive edge from their digital business product development. Speed to market demand favors the rapid deployment that is possible via best-in-class SaaS solutions. Ongoing application enhancements and some degree of user customization can also be supported via these on-demand platforms.