SaaS to Remain the Highest Spending Cloud Service by 2023


    Worldwide Public Cloud Services Spending Guide by IDG has forecasted SaaS to be the largest category of cloud spending, and very large businesses to be the biggest buyers

    The global spend on public cloud services and infrastructure is expected to double from 2019 to 2023. According to the report ‘Worldwide Semi-annual Public Cloud Services Spending Guide’ from International Data Corporation (IDC), public cloud spending will increase from USD 229 billion in 2019 to nearly USD 500 billion in 2023, with a five-year CAGR of 22.3%.

    Experts suggest that this adoption of public (shared) cloud services will continue to grow rapidly because enterprises, specifically in professional services including retail and telecommunications shift technologies.

    The shift is from the traditional application of software to SaaS and from conventional infrastructure to IaaS for enhancing customer experience and operational-led digital transformation (DX) initiatives.

    Among all the cloud-based services, Software-as-a-Service (SaaS) will remain the largest category of cloud computing that is expected to capture over 50% of all public cloud spending. In SaaS spending too that is comprised of applications and the system infrastructure software (SIS) is projected to be dominated by applications purchases.

    The leading SaaS applications will include enterprise resource management (ERM) and customer relationship management (CRM). SIS spending will be led by security software purchases as well as system and service management software.

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    The Worldwide Semi-annual Public Cloud Services Spending Guide has quantified public cloud computing purchases for 79 technologies and 20 industries in 53 countries.

    The report projects Infrastructure-as-a-Service (IaaS) to be the second largest category in public cloud spending, followed by Platform-as-a-Service (PaaS). Since the IaaS spending is comprised of servers and storage devices, it will also be the fastest growing category of cloud computing spend with a five-year CAGR of 32.0%.

    The spending of PaaS will also grow nearly as fast with, CAGR of 29.9%, led by data management software purchases, application platforms purchases, and integration and orchestration middleware.

    The Spending Guide report also states that three industries, including discrete manufacturing, professional services, and banking, will be the ones accounting for almost 35% of all public cloud services spending.

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    Experts have opined that though SaaS spending will see the highest investments for all industries, with the current growth rate, IaaS is expected to have an increased share of spending because many industries are building data as well as compute-intensive services.

    In 2023, IaaS spending will be more than 40% of public cloud services spending by the professional services industry, compared to less than 30% for most other industries. It is the professional services which will see the fastest growth in the public cloud spending with CAGR of 25.6% for five years.

    Considering the geography, the US will be the largest public cloud services market that will account for more than half the worldwide total.  The Western Europe market follows US with almost 20% of the Worldwide total. China will also experience the fastest growth in the public cloud services spending for five-years CAGR of 49.1%.

    The report predicts that in the company size categories except for very large businesses (more than 1000 employees) will experience spending growth greater than the overall market. The very large businesses are projected to account for more than half of all public cloud spending, while medium-size businesses (between 100-499 employees) will deliver around 16% of the worldwide total.

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