Public Cloud Spending To Grow 18.4% in 2021: Gartner

Gartner forecasts that the global public cloud spending is expected to grow by 18.4% in 2021 to a total of $304.9 billion. Will cloud continue to dominate the world in 2021?

Cloud computing is one of the fastest-growing and much-needed technologies in today’s era, and the global pandemic has only made that clearer. The massive shift to the work-from-home model catalyzed a shift towards cloud infrastructure and made cloud essential for smooth business operations. Before the pandemic, 44% of enterprises relied on hybrid cloud, and 34% operated fully on-premises with a projection that cloud usage would increase in 2020. 

The pandemic surged enterprises’ IT budgets and fast-tracked digital transformation. A new survey by Centrify revealed that amid the pandemic, 48% of enterprises accelerated cloud migration plans to support remote working. This was also highlighted by Spiceworks Ziff Davis 2021 State of IT reportOpens a new window , which forecasted that 35% of organizations have or plan to accelerate the migration of workloads to cloud due to COVID-19. 

From ecommerce and telehealth to e-learning, telecom, and manufacturing, every industry has reaped the benefits of cloud technology. Unsurprisingly, businesses that made steady investments in cloud weathered the pandemic better than those who had not prioritized cloud adoption. The pandemic gave a clear message to business leaders—a solid cloud strategy is the case of survival of the fittest.

Now that cloud technology has become a fundamental part of any successful enterprise, companies are planning to expand their IT budgets. A recent report from Gartner predicted that the global end-user public cloud spending is expected to grow 18% in 2021 to total $304.9 billion, up from $257.5 billion in 2020. The report also indicated that cloud would make 14.2% of the total global enterprise IT spending market in 2024, up from 9.1% in 2020. Let’s find out more about the spike in cloud technology.

Also Read: Debunked: 3 Myths Holding Businesses Back from Moving To the Cloud

A Soaring Trust in Public Cloud

Global Public Cloud Spending
Source: GartnerOpens a new window

Regardless of the pandemic, cloud technology was growing steadily. Be it regulated industries such as financial institutions, healthcare, or industries such as telecom, manufacturing, and retail, cloud adoption was widespread. This was due to the myriad of benefits associated with cloud, including scalability, flexibility, security, and cost-efficiency. In fact, the pandemic even dissipated several myths around cloud migration and encouraged businesses of all sizes to migrate their data to cloud.

Sid Nag, research vice president at Gartner, saidOpens a new window , “The COVID-19 pandemic forced organizations to quickly focus on three priorities: preserve cash and optimize IT costs, support and secure a remote workforce, and ensure resiliency. Investing in cloud became a convenient means to address all three of these needs.”

The growth in cloud spiked the adoption of SaaS, including cloud collaboration and communications solutions, which benefited companies like Zoom, Microsoft Teams, and Cisco Webex. It is expected that post-pandemic, SaaS will continue to remain the largest segment of cloud market and will tap into $117.7 billion of enterprise investment in 2021. This would be a 15% rise compared to 2020. The next segment that is expected to see an uptick in enterprise spending is PaaS. Gartner predicts that PaaS will grow by 26.6% in the coming year.

The report explainedOpens a new window that “the increased consumption of PaaS is driven by the need for remote workers to have access to high performing, content-rich and scalable infrastructure to perform their duties, which largely comes in the form of modernized and cloud-native applications.”

Apart from the rise in remote working technologies and collaboration sprouted by cloud technology, Gartner predicts a rise in public cloud adoption in the telecom industry. With 5G plans in fruition, the telecom industry has expedited their cloud transformation efforts. Public cloud providers have partnered with telcos to bolster their cloud journey. 

Last week, Amdocs partnered with AWS to deliver cloud-native business support systems (BSS) offerings to CSPs. In the past, Netcracker Technology has collaborated with Google Cloud for business modernization, while Microsoft has strategic cloud partnerships with Telefonica, SK Telecom, Reliance Jio, and NTT. 

Nag further addedOpens a new window , “As CIOs think more strategically about how to lay the foundations to support a return to growth, it is clear that the move to digital and associated services will play a big role for organizations in the future. Cloud adoption, therefore, becomes a significant means to stay ahead in a post-COVID-19 world focused on agility and digital touchpoints.”

As enterprises continue to trust and invest in public cloud, the Gartner survey indicates that almost 70% of enterprises using cloud services plan to increase their cloud spending in the wake of the disruption caused by COVID-19. A report from Flexera echoes similarity to Gartner’s research. Flexera’s 2020 State of the Cloud ReportOpens a new window found that 59% of enterprises expect cloud usage to exceed the expected cloud usage plans due to COVID-19. 

With an increase in cloud usage plans, the Flexera report also revealed that cloud spend is projected to increase by 47% next year. This was also highlighted by Spiceworks Ziff Davis 2021 State of IT report, which noted that cloud services would account for 24% of IT spending in 2021 (a significant hike from just 21% in 2019). 

Kim Weins, VP of cloud strategy at Flexera, saidOpens a new window , “The growth has driven a significant increase in public cloud spend, and the COVID-19 outbreak may drive that spend even higher. As a result of continually increasing cloud spend, optimizing the existing use of cloud (cost savings) continues to be the top cloud initiative for all organizations for the fourth year in a row.”

Also Read: Cloud Race: Will Microsoft Azure Displace Amazon AWS?

Winners of Public Cloud During COVID-19

The profitable cloud market spurred revenues for public cloud giants, including AWS, Microsoft, Google, IBM, and Alibaba. New data from Synergy Research Group found that enterprise spending on cloud infrastructure services was almost $33 billion in Q3 2020Opens a new window , up 33% from Q3 of 2019.

Amazon and Microsoft continued being the market leaders with a combined share of 52%. Other cloud providers who led the market were Google, Alibaba, Tencent, SAP, Oracle, and Salesforce. The financial earnings reports for Q3 2020 by Amazon, Microsoft, and Google revealed their strong revenue and profit gains due to the pandemic-driven public cloud consumption.

John Dinsdale, a chief analyst at Synergy, saidOpens a new window , “It is quite clear that COVID-19 has provided an added boost to a market that was already developing rapidly. Amazon and Microsoft are in a league of their own, while others are either aggressively seeking to grow their position in the market or are more focused on specific services, geographies or customer groupings.”

Talking about the future of cloud adoption, Richard L. Villars, group vice president, worldwide research at IDC, saidOpens a new window , “By the end of 2021, based on lessons learned in the pandemic, most enterprises will put a mechanism in place to accelerate their shift to cloud-centric digital infrastructure and application services twice as fast as before the pandemic.”

The post-COVID-19 world demands enterprises of all sizes to stay resilient and agile. And the answer to this is embracing cloud technology. With cloud technology, enterprises can not only survive but even thrive in a volatile environment. The right cloud adoption strategy will not only support business continuity and remote workforce but also add significant value to businesses during and beyond COVID-19.

Will cloud continue to dominate the digital world in 2021? What are your thoughts? Comment below or let us know on LinkedInOpens a new window , TwitterOpens a new window , or FacebookOpens a new window . We’d love to hear from you!