Gartner: Spending On Public Cloud Services Growing Rapidly

Worldwide spending on cloud services will move on a steep growth trajectory in the coming years as businesses move more of their IT resources to the cloud, the technology research firm Gartner said.

Spending on enterprise public cloud services is expected to hit $109 billion in 2012, up from $91 billion in 2011. In 2016, cloud services spending will reach $207 billion, the research firm said.

The projected growth in cloud spending will occur as businesses expand the services they are willing to have hosted in the cloud, said Ed Anderson, Gartner research director, in an interview with CRN.

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Currently, the most popular cloud services involve business process outsourcing, but as companies grow more familiar with the cloud, they will move other parts of their data center resources to the cloud.

’Cloud computing is at the point where the technology has been demonstrated to be a reasonable approach to managing some IT resources,’ Anderson said.

Business process outsourcing -- the contracting of operations of business functions or processes such as human resources, accounting or contact centers to third-party service providers such as Deloitte, Accenture, ADP and CSC -- accounts for the most spending on cloud services.

This market segment, termed by Gartner as Business Process-as-a-Service, will account for $84 billion in 2012, up from $72 billion in 2011, and is projected to reach $145 billion in 2016.

But spending on Software-as-a-Service (SaaS), Infrastructure-as-a-Service (IaaS), and Platform-as-a-Service (PaaS) is expected to continue to account for much growth going forward, he said.

Cloud services spending on SaaS has been fueled by cloud hosting of business applications such as Microsoft’s Office suite, Google Apps and Salesforce.com’s CRM apps, he said. Spending on SaaS will reach $14 billion in 2012, up from $12 billion in 2011, and is projected to reach $27 billion in 2016.

NEXT: IaaS Market Projected For Fast Growth

The fastest growing segment will be in the IaaS market, Gartner's Anderson said. ’If I’m running servers in the data center now, I’m realizing I can pack them up and drop them in Amazon E2,’ Anderson said.

Public cloud services spending for IaaS will reach $6 billion in 2012, up from $4 billion in 2011, and is projected to reach $24 billion in 2016.

Anderson said IaaS early movers -- Rackspace, Terremark and Amazon -- captured most of the IaaS market, but traditional IT vendors such as Microsoft, HP and IBM, as well as large outsourcers such as Cognizant and Wipro, are offering similar services.

Although cloud services spending on Platform-as-a-Services is not expected to be as high as other segments, it will involve scores of companies offering a wide variety of services to help businesses reach cloud providers via technology platforms.

Platform-as-a-Service will account for a $1.2 billion in 2012, up from $0.9 billion in 2011, and is projected to reach $27 billion in 2016.

’This is a small part of the overall spending, but it is a growth driver for vendors who have IaaS or SaaS offerings,’ Anderson said. ’So, they will be a critical strategic piece.’

Cloud management and security project the smallest piece of the cloud-services spending pie, with 2012 spending to be at $3 billion, up from $2 billion in 2011, with spending in 2016 to reach $8 billion.

The Gartner report said overall worldwide IT spending will reach $3.6 trillion in 2012, up 3 percent from $3.5 trillion in 2011.

PUBLISHED JULY 9, 2012