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Whole Cloud Computing Revenue will Reach $1 Trillion

Many organizations across the globe have considered ways to optimize and contain their information technology (IT) investments, due to the current economic environment. However, the COVID-19 pandemic has actually proven to be an accelerator of cloud services adoption, driving the quest for greater results from digital business transformation projects.

Total worldwide spending on cloud computing -- the hardware and software components underpinning cloud services, and the professional and managed services opportunities around cloud -- will surpass $1 trillion in 2024 while sustaining a double-digit compound annual growth rate (CAGR) of 15.7 percent, according to the latest market study by International Data Corporation (IDC).

Whole Cloud Computing Market Development

"Cloud in all its permutations – hardware/software/services/ 'everything-as-a-service', as well as public cloud, private cloud, hybrid cloud, multi-cloud and edge computing – will play ever greater, and even dominant, roles across the IT industry for the foreseeable future," said Richard L. Villars, vice president at IDC.

By the end of 2021, based on lessons learned during the global pandemic, most enterprises will put a mechanism in place to accelerate their shift to cloud-centric digital infrastructure and application delivery services -- achieving growth twice as fast as before the pandemic.

The strongest growth in cloud computing revenues will come in the 'as a service' category – public (shared) cloud services and dedicated (private) cloud services. This category, which is also the largest category in terms of overall revenues, is forecast to deliver a five-year CAGR of 21 percent.

According to the IDC assessment, by 2024, the 'as a service' category will account for more than 60 percent of all cloud computing revenues worldwide.

The services category, which includes cloud-related professional services and cloud-related management services, will be the second-largest category in terms of revenue but will experience the slowest growth with an 8.3 percent CAGR. This is due to a variety of factors, including greater use of automation in cloud migrations.

The smallest cloud category, infrastructure build, which includes hardware, software, and support for enterprise private clouds and service provider public clouds, will enjoy solid growth (11.1 percent CAGR) over the forecast period.

Outlook for Cloud Computing Applications Growth

While the impact of an ongoing global pandemic could have negative effects on cloud adoption over the next several years, IDC says there are a number of factors that are driving the market forward.
  • The ecosystem of tech companies helping customers migrate to cloud environments, create new innovations in the cloud, and manage their expanding cloud environments will enable enterprises to meet their accelerated schedules for moving to cloud computing platforms.
  • The emergence of consumption-based IT offerings is aimed at leveraging public cloud-like capabilities in an on-premises environment that reduces the complexity and restructures the cost for enterprises that want additional security, dedicated resources, and more granular management capabilities.
  • The adoption of cloud services should enable organizations to shift IT from the maintenance of legacy IT to new digital transformation initiatives, which can lead to new business revenue and competitiveness as well as create new opportunities for suppliers of professional services.
  • Hybrid cloud has become central to successful digital transformation efforts by defining an IT architectural approach, an IT investment strategy, and an IT staffing model that ensures the enterprise can achieve the optimal balance across dimensions without sacrificing performance, reliability, or control.

That said, I believe that the continued growth of public cloud computing services, and software-as-a-service (SaaS) in particular, will motivate CIOs and CTOs to re-assess their overall enterprise networking strategy. The emergence of flexible 'Hybrid Working' models requires secure access to on-premises IT resources and SaaS apps from anywhere employees choose to reside or visit.

Legacy virtual private networking (VPN) solutions must be reconsidered, in light of these new demands. IDC's notion of a 'branch of one' person will likely increase the adoption of software-defined networking (SDN) solutions that accommodate all potential variations of branch office configuration and location.

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