Public Cloud Services Providers to Rake in $195 Billion by 2020

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International Data Corporation (IDC) is predicting that boom times lay ahead for public cloud services providers.

The IT analyst group expects the public cloud services market to reach $195 billion in revenues by 2020, more than double the $96.5 billion that the market is forecast to generate this year. Between 2015 and 2020, IDC expects the market to expand at a brisk compound annual growth rate (CAGR) of 20.4 percent.

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The shift from on-premises apps to cloud-based solutions, in particular will help propel the software-as-a-service (SaaS) category to new heights. “Cloud software will significantly outpace traditional software product delivery over the next five years, growing nearly three times faster than the software market as a whole and becoming the significant growth driver to all functional software markets,” said IDC senior research analyst Benjamin McGrath in a statement.

SaaS combined with the platform-as-a-service (PaaS) segment of the market accounted for a whopping 83.7 percent of all the sales generated by public cloud services providers in 2015. And in a few short years, it will have a major effect on enterprises software buying strategies.

“By 2020, about half of all new business software purchases will be of service-enabled software, and cloud software will constitute more than a quarter of all software sold,” continued McGrath.

In 2015, infrastructure-as-a-service (IaaS) was responsible the remainder of public cloud revenues (16.3 percent). Together, IaaS and PaaS are poised to grow at a faster rate than SaaS during the forecast period, eating into the latter’s slice of the overall market.

Geographically, the United States will remain the cloud leader with nearly two-thirds of all public cloud services revenues generated through 2020. Western Europe and the Asia-Pacific (APAC) region, excluding Japan, will follow.

The manufacturing, banking and professional services verticals will lead the way in terms of cloud demand this year. Through 2020, the media, telecommunications, and retail will pick up the pace, snapping up cloud services at a faster rate than other industries.

Caught in the throes of their digital transformation initiatives, enterprises in all types and across practically all industries are driving demand for cloud services. “Cloud computing is breaking down traditional technology barriers as line of business leaders and their IT organizations rely on cloud to flexibly deliver IT resources at the lower cost and faster speed that businesses require,” stated IDC program director Eileen Smith. “Organizations across all industries are now free to adapt to market changes quicker and take more risks, as they are no longer bound by legacy IT constraints.”

Pedro Hernandez is a contributing editor at Datamation. Follow him on Twitter @ecoINSITE.