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February 22, 2017

Public cloud spending: It’s time to ignore the forecasts and focus on the business value

The obsession with how big the market is just distracts from the important questions.

By James Nunns

The public cloud, a place where work is made easier, where everything is cheaper (supposedly) and dreams are made. That’s the image of the technology that is basically renting server space in some data centre.

It’s an image and marketing story that has grabbed the attention of the tech industry and many businesses around the world. We know that it has, and continues to, because barely a day goes by without a new report coming out to tell us so.

Earlier this week it was the analysts at IDC that revealed the spending on public cloud services and infrastructure is expected to reach $122.5bn this year, a growth of 24.4% from last year.

Further good news from the analyst firm is that public cloud spending should reach $203.4bn by 2020.

Then we have Gartner, who put a little bit of a dampener on things by saying that the worldwide public cloud services will grow by 18% this year to $246.8bn, up from $209.2bn in 2016.

You may notice a slight difference in the numbers pointing to how big the actual market size is, but these are projections, estimations and having a full and perfectly accurate picture is difficult. Plus, the analyst firms do tend to account for some different data sets, so sometimes it can be a little like comparing apples to oranges.

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What the two do agree on is that the market is growing, at a pretty rapid pace, and the types of public cloud that are growing the fastest – Software as a Service spending still dominates but Infrastructure as a Service adoption is growing faster.

Although the public cloud market is growing, and I think we can all agree on that, it is just a drop in the ocean when compared to the $2.4 trillion of total IT spend this year.

The figure presented by IDC, which looks at software, hardware and services spending, showed that the compound annual growth rate will be just 0.3%.

The slow growth rate can partly be attributed to a move away from the more costly hardware systems to the often cheaper cloud and software alternatives.

So yes, public cloud spending isn’t that impressive when compared to the overall IT spend, but it is one of the fastest growing areas in technology.

Read more: So long, cumbersome paper contracts. Hello, Adobe’s digital signatures in the cloud

It should also be noted that the cloud computing industry hasn’t been around as long as enterprise IT has been. Perhaps those kinds of comparison only serve to remind everyone that although cloud is talked about constantly, it remains a new sector – at least in context of the overall IT industry.

The predictions and expectations do need to be taken with a pinch of salt, they may be correct, they may not be, what really matters is that the technology works and is right for your business and the use case it is being applied to.

Plus, I don’t think anyone remembers if the growth forecasts made in 2011 about public cloud were right. Fortunately, thanks to the Internet, we can see how accurate the forecasts were.

In June 2011 IDC said that spending on public IT cloud services would hit $72.9bn in 2015, well in 2015 IDC said that the market would reach $70bn in spend – so I guess they were pretty accurate.

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