Cloud Services are Instrumental to IT Transformation

According to the latest market study by International Data Corporation (IDC), cloud computing will continue to reshape the business technology landscape over the next five years -- as spending on public cloud services expands at a CAGR of 27.6 percent, from $21.5 billion in 2010 to $72.9 billion in 2015.

That said, apparently the trend and resulting impact of cloud services will extend well beyond information technology (IT) spending. Managed cloud services are a critical component in a much larger transformation that IDC expects will be instrumental in driving IT industry growth for the next 25 years.

"Cloud services are interconnected with and accelerated by other disruptive technologies, including mobile devices, wireless networks, big data analytics, and social networking," said Frank Gens, senior vice president and chief analyst at IDC.

This collective group of technologies are merging into the industry's third major platform for long-term growth. Similar to the mainframe and PC eras, managed cloud services promises to radically expand the applications of IT infrastructure, resulting in a variety of unified service delivery solutions.

As a critical component to the third platform, cloud services represent a strategic growth area for traditional managed IT services and broadband service providers.

A Pathway Through the Disruptive Transformation

With spending for public IT cloud services growing at more than four times the rate of the worldwide IT market as whole, IDC expects one of every seven dollars spent on packaged software, servers, and storage offerings in 2015 will be related to the public cloud model.

Moreover, the eventual winners of the ongoing competition within the managed cloud service delivery marketplace will likely be the new business productivity trend leaders.

Highlights from IDC's latest market study include:

• In 2015, public cloud services will account for 46 percent of net new growth in overall IT spending in five key product categories -- applications, application development and deployment, systems infrastructure software, basic storage, and servers.
• Software-oriented cloud services (SaaS) will account for roughly three quarters of all spending on public cloud IT services throughout the forecast. This includes all three software-oriented cloud categories, not just applications. Spending on hardware-oriented cloud services (servers and storage) will be largely driven by SaaS providers building out their infrastructure.
• The United States will dominate overall spending throughout the forecast period, with nearly 50 percent of all public IT cloud services revenues coming from the U.S. in 2015. But regions outside the U.S. will show much stronger growth as cloud services adoption accelerates.
• In particular, IDC found that there are more cloud services vendors and greater end user spending in Asia-Pacific and Western Europe than previously thought.
• IDC defines public IT cloud services as those offerings designed for, and commercially offered to, a largely unrestricted marketplace of potential users. The forecast does not include revenue from private cloud deployments, which are dedicated to a specific customer.
•  While private clouds provide businesses with the ability to specify access limitations and the level of resource dedication beyond what is currently available in public cloud offerings, IDC's expectation is that public clouds will mature and eventually incorporate many of the capabilities  -- particularly security and availability -- that make private clouds a more attractive option today.

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