Cloud computing: SaaS, IaaS or PaaS - which is growing fastest?

Now that cloud computing has hit the mainstream, spending patterns are changing.
Written by Steve Ranger, Global News Director

As cloud computing continues to eat up traditional tech spending, businesses are beginning to change where they spend their money.

The worldwide public cloud services market is forecast to grow 17% in 2020 to a total of $266.4 billion, up from $227.8 billion in 2019, according to tech analyst Gartner.

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Cloud computing adoption has now become mainstream, said Sid Nag, research vice president at Gartner. That means higher spending on cloud, but also higher expectations from cloud buyers as to what they will get for their money.

According to Gartner, software-as-a-service (SaaS) will remain the largest market segment: SaaS is forecast to grow to $116 billion next year, up from $99.5 billion in 2019.

Image: Gartner

The second-largest sector is cloud infrastructure-as-a-service (IaaS), which will reach $50 billion in 2020. IaaS is forecast to grow 24% year over year, the highest growth rate across all market segments, which Garter said was the result of data centre consolidation. That's because modern applications and workloads -- many of which are cloud applications themselves -- now require infrastructure at a scale that traditional data centres cannot meet.

Cloud computing was listed among the top three areas where most global CIOs will increase their investment next year, Gartner said: "As organisations increase their reliance on cloud technologies, IT teams are rushing to embrace cloud-built applications and relocate existing digital assets."

However, as the use of cloud computing goes mainstream, the landscape will become increasingly sophisticated and competitive -- so much so that customers will need help with managing multiple cloud suppliers and applications.

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By 2022, Gartner said, up to 60% of organisations will use an external service provider's cloud-managed service offering -- twice the number in 2018.

"Cloud-native capabilities, application services, multicloud and hybrid cloud comprise a diverse cloud ecosystem that will be important differentiators for technology product managers. Demand for strategic cloud service outcomes signals an organisational shift toward digital business outcomes," Nag said.

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