Rise of the Cloud

The October 2017 edition of Manufacturing & Logistics IT features a Special Technology Report on WMS and Voice picking.

One of the key discussion areas within the report concerns the part Software as a Service (SaaS) and the Cloud model in general is currently playing within this particular technology arena. But what of the Cloud services market in general? According to Gartner, strong SaaS and Infrastructure as a Service (IaaS) performance is driving growth this year.

The worldwide public cloud services market revenue is projected to grow 18.5% in 2017 to total US$260.2 billion, up from $219.6 billion in 2016, according to Gartner. “Final data for 2016 shows thatSaaS revenue was far greater in 2016 than expected, reaching $48.2 billion,” Sid Nag, research director at Gartner, pointed out. “SaaS is also growing faster in 2017 than previously forecast, leading to a significant uplift in the entire public Cloud revenue forecast.”

SaaS revenue is expected to grow 21% in 2017 to reach $58.6 billion, states Gartner. The acceleration in SaaS adoption can be explained by providers delivering nearly all application functional extensions and add-ons as a service. Gartner believes this appeals to users because SaaS solutions are engineered to be more purpose-built and are delivering better business outcomes than traditional software is.

“Strategic adoption of Platform as a Service (PaaS) offerings is also outperforming previous expectations, as enterprise-scale organisations are increasingly confident that PaaS will be their primary form of application development platform in the future,” continued Nag. “This accounts for the remainder of the increase in this iteration of Gartner's public Cloud services revenue forecast.”

Gartner believes the highest revenue growth will come from Cloud system IaaS, which is projected to grow 36.6% in 2017 to reach $34.7 billion. Although public Cloud revenue is growing more strongly than initially forecast, Gartner still expects growth even out from 2018 onwards. Gartner’s view is that this stabilisation reflects the increasingly mainstream status and maturity that public Cloud services will gain within a wider IT spending mix.

“As of 2016, approximately 17% of the total market revenue for infrastructure, middleware, application and business process services had shifted to Cloud,” said Nag, who added that through 2021 this will increase to approximately 28%.

In terms of vendor share, Gartner expects 70% of public Cloud services revenue to be dominated by the top 10 public Cloud providers through 2021. “In the IaaS segment, Amazon, Microsoft and Alibaba have already taken strong positions in the market,” explained Nag. “In the SaaS and PaaS segments, we are seeing Cloud's impact driving major software vendors such as Oracle, SAP and Microsoft from on-premises, licence-based software to Cloud subscription models.”

Gartner clients can read more in the reports: ‘Forecast Analysis: Public Cloud Services, Worldwide, 2Q17 Update’ and ‘Forecast: Public Cloud Services, Worldwide, 2015-2021, 2Q17 Update’. Complimentary research and webinars are available at the Gartner Cloud Hub.

One thing’s for sure; the Cloud is on the rise.