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September 15, 2016updated 03 Oct 2016 2:40pm

Vendors on cloud nine as market continues explosive growth

The public cloud market will surpass $200bn this year.

By James Nunns

Another day and another good piece of news for public cloud vendors as the market is projected to grow at over 17% this year.

As the barriers to adoption of these services become less significant businesses have increasingly looked to ramp up their consumption, which is good news for the vendors.

According to Gartner, the worldwide public market is projected to grow at 17.2% in 2016 to total $208.6bn, up from $178bn in 2015. The highest growth will come from cloud system infrastructure services (Infrastructure as a Service) at a rate of 42.8% this year.

Software as a Service is expected to grow at 21.7% in 2016 to reach $38.9bn.

What the IaaS projected figures show is that businesses are becoming increasingly comfortable with handing over their infrastructure to a vendor such as Amazon Web Services, Microsoft Azure, Oracle and more.

Sid Nag, research director at Gartner said: “Growth of public cloud is supported by the fact that organisations are saving 14 per cent of their budgets as an outcome of public cloud adoption, according to Gartner’s 2015 cloud adoption survey.

“However, the aspiration for using these services outpaces actual adoption. There’s no question there is great appetite within organisations to use these services, but there are still challenges for organisations as they make the move to the cloud. Even with the high rate of predicted growth, a large number of organisations still have no current plans to use cloud services.”

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Statistica forecast for cloud IaaS hardware and software spending.

Statistica forecast for public cloud IaaS hardware and software spending.


While the growth figures are promising there remain barriers to adoption, such as security and privacy concerns, which is why many businesses still don’t have plans for using this technology.

However, many businesses do have plans and according to Gartner the top driver is currently IT modernisation, followed by cost savings, innovation, agility and other benefits.

The analyst firm said that the focus on IT modernisation indicates a more sophisticated and strategic use of these services.

On the security front Gartner believes that the public services offered by leading providers are secure, but the security challenge is in using public services in a secure manner.

Ed Anderson, research VP at Gartner, said: “More education is needed to help organizations overcome the hype associated with security concerns. This should be a key area of focus for providers in working with their clients to unlock the benefits of public cloud services.”

Additional findings from the research show that most organisations are already using a combination of services from different providers. This has been seen with big customer stories for the likes of Spotify, which is using both AWS and Google.

Public isn’t the only cloud that’s growing as the use of private and hosted private cloud services are also predicted to increase through 2017.

For those vendors looking at hybrid as the future model for this mixed bag of services there is good news. Gartner expects the hybrid scenario to dominate but many businesses that aren’t planning to use it have fears around integration challenges, application incompatibilities, a lack of management tools, a lack of common APIs and a lack of vendor support.

While these are key concerns, they also provide an opportunity for vendors. Anderson said: “We know that public cloud services will continue to grow. We also know that private cloud services (of various types) will become more widely used. Therefore, providers must focus on the top hybrid challenges to be successful in meeting the growing demand for hybrid cloud solutions.”

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