Published on October 16, 2023, 2:53 pm
Gartner, a leading research and advisory company, has made a forecast regarding the global end-user spending on public cloud services. According to their predictions, this spending is expected to grow by 21.7% in 2023, reaching a total of $597.3 billion. This is a significant increase from the $491 billion spent in 2022.
The rise of cloud computing is playing a crucial role in driving the next phase of digital business. Organizations are increasingly adopting emerging technologies such as generative artificial intelligence (AI), Web3, and the metaverse to innovate and disrupt their industries.
Cloud providers at hyperscale are taking the lead when it comes to shaping the cloud agenda. Companies now view the cloud as a highly strategic platform for their digital transformation initiatives, which means that cloud providers need to offer more advanced capabilities to stay competitive.
Generative AI is one technology that is benefiting greatly from cloud computing. It relies on large language models (LLMs) that require powerful and scalable computing resources to process data in real time. Cloud platforms provide an ideal solution for this demand, which explains why major players in the generative AI race are often cloud hyperscalers.
Gartner’s predictions indicate that all segments of the cloud market will experience growth in 2023. Infrastructure-as-a-service (IaaS) is expected to have the highest spending growth at 30.9%, followed by platform-as-a-service (PaaS) at 24.1%. SaaS (software-as-a-service) remains the largest segment of the cloud market in terms of end-user spending, with projected growth of 17.9% to reach $197 billion in 2023.
Looking ahead, Gartner believes that by 2026, around 75% of organizations will adopt a digital transformation model centered on using the cloud as their foundational platform.
According to Sid Nag, Vice President Analyst at Gartner, customer experience, digital and business outcomes, and the virtual-first environment will be critical drivers of IaaS growth. Chatbots, digital twins, and other emerging technologies that facilitate real-time customer interaction rely heavily on cloud infrastructure and platform services to meet the escalating demands for compute power and storage.
While infrastructure services and platform solutions are witnessing significant spending growth, SaaS continues to dominate the cloud market in terms of end-user spending. It is projected to grow by 17.9%, reaching a total of $197 billion in 2023.
Nag mentioned that hyperscalers currently dominate the technology substrate of cloud computing. However, leadership at the business application layer is more fragmented as providers face pressure to enhance SaaS offerings for improved productivity utilizing cloud-native capabilities, embedded AI, and composability. This transformation is expected to drive innovation and replacements within the cloud platform and application markets.
In conclusion, Gartner’s forecast highlights the continuous growth anticipated in global end-user spending on public cloud services. Cloud computing remains a key driver for organizations seeking digital disruption, with generative AI being one of many emerging technologies benefiting from the scalability and capabilities offered by cloud platforms. As businesses continue their digital transformation journeys, it is clear that the cloud is becoming an indispensable foundation for success.