The public cloud has long been considered the fundamental 'foundation' for transforming business processes. Its flexibility and low cost, along with its ease of deployment, have made it a key component of any IT initiative. It is no wonder that, according to the consultancy IDC, spending on public cloud computing services is expected to reach more than US$ 195 billion in 2020.

This is more than double the projected spending for 2016 of $96.5 billion. The 'Worldwide Semiannual Public Cloud Services Spending Guide' , published recently, also showed that this figure represents a Compound Annual Growth Rate (CAGR) of 20.4% between the years 2015 and 2020. In today's post, we will talk about the conclusions made by IDC in this research. Follow:

Cloud versus traditional software

Over the next five years, the use of cloud software will surpass that of traditional software, which requires paying for licenses and hosting on local IT infrastructure. In that period, cloud computing-based software will also grow nearly three times faster than the software industry itself, thus becoming an important 'growth engine' for all segments of this market.

Even manufacturers, who resist change and are slow to adopt new technologies, are already considering the idea of ​​leaving aside the traditional ERP and migrating to a cloud-based system. Research conducted by IDC also showed that by 2020, cloud software will account for more than a quarter of all software sold, and will account for much of public cloud spending.

Leveraging IaaS and PaaS spending

In 2015, the top three segments of the software market – Applications as a Service, AD&D (Application Development and Deployment) and SIS (System Infrastructure Software) – accounted for 83.7% of public cloud spending. IaaS (Infrastructure as a Service) accounted for the remaining 16.3%. But IDC predicts that IaaS and PaaS (Platform as a Service) revenues will grow at a faster rate than SaaS.

Revenue growth around the world

According to IDC, the United States will be the largest market for public cloud services, generating about two-thirds of total revenues worldwide. The other two main markets will be Western Europe and Asia/Pacific (excluding Japan). All regions included in the survey will experience revenue growth in excess of 100% over the next five years, with Latin America having the highest leverage.

All of this growth is likely to occur because the cloud is breaking down traditional technology barriers. Furthermore, managers are not finding another technology that offers the same flexibility, speed and low cost as the cloud. That's why an increasing number of companies, across all industries, will continue to ditch their legacy IT infrastructure and move to the cloud through 2020.

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Written by

Sky.One Team

This content was produced by SkyOne's team of cloud and digital transformation experts.