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Worldwide spending on public cloud services is expected to reach $332.3 billion in 2021, an increase of 23.1% from 2020, according to the latest Gartner forecast. Public cloud spending in 2020 was $270 billion.

Cloud spending is getting a boost because emerging technologies such as containerization, virtualization, and edge computing are becoming more mainstream, Sid Nag, research vice president at Gartner, said in the forecast. Software-as-a-service (SaaS) remains the largest market segment and is forecast to reach $122.6 billion in 2021, spurred by the demand for composable applications.

“The events of last year allowed CIOs to overcome any reluctance of moving mission critical workloads from on-premises to the cloud,” Nag said. There was an expectation that some workloads had to stay on-premises, but the past year showed those concerns were unfounded. But even if there hadn’t been a pandemic, Nag said there was a “loss of appetite” for datacenters.

As organizations mobilize for a massive global effort to produce and distribute COVID-19 vaccinations, SaaS-based applications that enable essential tasks such as automation and supply chain are critical. The fact that these applications demonstrate reliability in scaling vaccine management will help CIOs validate the ongoing shift to cloud, Gartner said.

Growth across all areas

Desktop-as-a-service (DaaS) will see the highest growth in 2021, growing 67.7% to reach $2 billion, followed by infrastructure-as-a-service (IaaS) at 38.5% to reach $82 billion. CIOs will boost IaaS and DaaS spending as they continue to face pressure to scale infrastructure that supports complex workloads and meets the demands of a hybrid workforce, Gartner said. Growth in IaaS and DaaS will slow down 30% in 2022, with spending to reach $106.8 billion and $2.7 billion, respectively.

Cloud spending will grow across all areas in 2021, Gartner said in its forecast. Business process services (business-product-as-a-service, or BPaaS) is forecast to reach $50.1 billion, and application infrastructure services (platform-as-a-service, or PaaS) will reach $59.4 billion. Cloud management and security services will reach $16 billion.

Worldwide public cloud spending forecast by Gartner, April 2021

Cloud drives innovation

The public cloud market fared well over the past year as enterprises relied on cloud services to maintain business continuity in light of business disruptions and shift to a remote workforce. However, cloud spending will look different in 2021 and 2022 as enterprises shift away from infrastructure and application migration and toward innovative applications combining cloud with technologies such as AI, internet of things, and 5G.

“Cloud will serve as the glue between many other technologies that CIOs want to use more of, allowing them to leapfrog into the next century as they address more complex and emerging use cases,” Nag said.

Companies depend on the cloud to adopt emerging technologies at scale, and the resulting applications and workloads encourage more cloud spending. For example, a company building an IoT application could use virtual machines and containers to build at scale, and then buy more cloud services to manage the data that is generated.

Gartner is not the only one noting that emerging technologies such as edge computing is growing rapidly. International Data Corporation (IDC) said the worldwide edge computing market is expected to reach $250.6 billion in 2024. The services market should account for 46.2% of all edge spending by 2024, followed by hardware at 32.2% and edge software at 21.6%, IDC said.

Earlier this month, Gartner predicted worldwide IT spending will reach $3.8 trillion in 2021, an increase of 4% from 2020. The biggest growth is expected in enterprise software, fueled by enterprises accelerating their digital transformation plans to deliver virtual services such as distance learning, telehealth, and automation. Other areas of spending include datacenter systems, communications, IT services, and devices. PC spending is also up this year.

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