San Francisco, NFAPost: Worldwide end-user spending on public cloud services is forecast to grow 21.7% to total $597.3 billion in 2023, up from $491 billion in 2022, according to the latest forecast from Gartner, Inc.
Cloud computing is driving the next phase of digital business, as organisations pursue disruption through emerging technologies like generative artificial intelligence (AI), Web3 and the metaverse.
Gartner Analyst and Vice President Sid Nag said hyperscale cloud providers are driving the cloud agenda.
“Organisations 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,” said Gartner Analyst and Vice President Sid Nag.
For example, Gartner Analyst and Vice President Sid Nag generative AI is supported by large language models (LLMs), which require powerful and highly scalable computing capabilities to process data in real-time.
“Cloud offers the perfect solution and platform. It is no coincidence that the key players in the generative AI race are cloud hyperscalers,” said Gartner Analyst and Vice President Sid Nag.
All segments of the cloud market are expected see growth in 2023. Infrastructure-as-a-service (IaaS) is forecast to experience the highest end-user spending growth in 2023 at 30.9%, followed by platform-as-a-service (PaaS) at 24.1%.
Gartner predicts that by 2026, 75% of organizations will adopt a digital transformation model predicated on cloud as the fundamental underlying platform.
Gartner Analyst and Vice President Sid Nag said the next phase of IaaS growth will be driven by customer experience, digital and business outcomes and the virtual-first world.
“Emerging technologies that help businesses interact more closely and in real time with their customers, such as chatbots and digital twins, are reliant upon cloud infrastructure and platform services to meet growing demands for compute and storage power,” said Gartner Analyst and Vice President Sid Nag.
While cloud infrastructure and platform services are driving the highest spending growth, SaaS remains the largest segment of the cloud market by end-user spending. SaaS spending is projected to grow 17.9% to total $197 billion in 2023.
In India, end-user spending on public cloud services is forecast to grow 26.3% to total $10.1 billion in 2023. IaaS is forecast to record the highest end-user spending growth in 2023, followed by the PaaS segment (see Table 2).
IaaS continues to be the core underlying scalable platform that powers new technologies such cloud native platforms, generative AI and digital touchpoints. Organizations in India that have historically lagged in adopting those technologies are embracing them, which in turn is fueling IaaS spending locally forecast to increase 33.1% in 2023.
Gartner Analyst and Vice President Sid Nag said in India, PaaS spending is set to continue to grow and will increase 30.5% in 2023.
“Spending on PaaS is driven by IT modernization efforts within Indian organizations, which have historically lagged and will remain a priority for local businesses this year,” said Gartner Analyst and Vice President Sid Nag/.
In addition, many applications and workloads that are running in the cloud are being modernized with new cloud-native technologies such as serverless, functions, microservices, containers and embedded AI.
Gartner Analyst and Vice President Sid Nag said the technology substrate of cloud computing is firmly dominated by the hyperscalers, but leadership of the business application layer is more fragmented.
“Providers are facing demands to redesign SaaS offerings for increased productivity, leveraging cloud-native capabilities, embedded AI and composability – particularly as budgets are increasingly driven and owned by business technologists. This change will ignite a wave of innovation and replacement in the cloud platform and application markets,” said Gartner Analyst and Vice President Sid Nag.