Gartner: Hybrid work helps boost use of cloud services

Gartner projects that global spending on public cloud services will come in at $494.6 billion this year due to both growth in cloud-native infrastructure services and the trend towards hybrid work scenarios driven by the pandemic as well.

That’s a 20.4% increase over the $410.9 billion in sales in 2021, just shy of the 21.2% growth to $599.8 billion that Gartner projects for 2023.

Because of the maturation of core cloud services, companies are past the tire-kicking stage and shifting their focus to capabilities that can affect digital business and enterprise operations.

“CIOs are beyond the era of irrational exuberance of procuring cloud services and are being thoughtful in their choice of public-cloud providers to drive specific, desired business and technology outcomes in their digital transformation journey,” said Sid Nag, research vice president at Gartner in a statement. “Public-cloud services have become so integral that providers are now forced to address social and political challenges, such as sustainability and data sovereignty.”

The greatest growth in spending is projected to be for infrastructure as a service (IaaS)—30.6% this year and another 30.5% next year. That is followed by desktop-as-a-service (DaaS), a consequence of the Covid lockdown and more people working from home. It is projected to grow 26.6% this year and another 23.7% next year.

However, DaaS is also by far the smallest category, just $2 billion this year compared to $176.6 billion for software as a service (SaaS) and $91.6 billion for IaaS. And with increasing numbers of companies ordering their staff to return to the office, don’t be surprised if the DaaS projections are subject to change.

The third largest category in 2022 is projected to be application infrastructure services, or platform-as-a-service (PaaS), coming in at $109.6 billion. All told, SaaS, IaaS, and PaaS will account for 82% of total cloud sales.

Nag said that the dollar increase is more attributable to the cost of the services than to a massive expansion of purchases. “Cloud-native capabilities such as containerization, database PaaS, and artificial intelligence/machine learning contain richer features than commoditized compute such as IaaS or network-as-a-service,” said Nag. “As a result, they are generally more expensive which is fueling spending growth.”

Gartner also pointed to new product categories such as hyperscale edge computing and secure access service edge (SASE) as disruptors to adjacent markets and are forming new product categories, creating new revenue streams for cloud providers.