Gartner, one of the world’s leading research and analytics firms, forecast that the global end-user spending on public cloud services is to grow 21.7% to a total of $597.3 billion in 2023, from $491 billion in 2022.
The cloud market is a rapidly growing field and all the segments of the industry are expected to see spending growth in 2023. Among these, the infrastructure-as-a-service (IaaS) is forecast to experience the highest rise, increasing by 30.9%, followed by platform-as-a-service (PaaS) at 24.1%. “Hyperscale cloud providers are driving the cloud agenda,” said Sid Nag, Vice President Analyst at Gartner.
While software-as-a-service (SaaS) spending is projected to grow at a slower rate, 17.9%, it remains the largest segment of the cloud market by total end-user spending. SaaS is expected to grow to a total of $197 billion in 2023.
“Organizations today view cloud as a highly strategic platform for digital transformation, which is requiring cloud providers to offer more sophisticated capabilities as the competition for digital services heats up,” added Sid Nag, in the company’s report. He added that in the current market, cloud computing is driving the next phase of digital business, as organizations pursue disruption through emerging technologies like generative artificial intelligence (AI), Web3, and the metaverse. Powerful computing capabilities to process data in real-time is what the world expects now.
Nag said that the next phase of IaaS will also be driven by emerging technologies, particularly as applied to customer experience. He explains that the aim of many of these technologies is also to help businesses interact better with their customers in real-time, for example with generative AI-powered chatbots, and are reliant upon cloud infrastructure and platform services to meet growing demands for compute and storage power.
The report observes that the technology substrate of cloud computing is firmly dominated by hyperscalers, but the leadership of the business application layer is more fragmented. The latest changes in the technology available will ignite a wave of innovation and replacement in the cloud platform and application markets.
Many industries are adopting IaaS, owing to its low cost, reliability, scalability, and improved functionality. The banking sector is one of the top industries in this regard. With the substantial benefits of AI-driven analytics, agility, and deep learning algorithms, cloud computing allows the banking sector to make changes quickly and keep up with functionality.
In a separate report published by Gartner in January, the analyst firm predicted that by 2025, 30% of outbound marketing messages from large organizations will be synthetically generated, up from less than 2% in 2022. Business technologists can firmly believe that cloud spending budget is going to increase by 50% at least for organizations.
“Cloud offers the perfect solution and platform. It is no coincidence that the key players in the generative AI race are cloud hyperscalers,” Nag said.
Gartner predicts that by 2026, 75% of organizations will adopt a digital transformation model predicated on the cloud as the fundamental underlying platform.