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Enterprise IT spending on public cloud computing within addressable market segments (application software, infrastructure software, business process services and system infrastructure markets) will overtake spending on traditional IT in 2025, according to Gartner, Inc. Of note, the majority (65.9%) of spending on application software will be directed toward cloud technologies in 2025.

In 2022, more than $1.3 trillion in enterprise IT spending is at stake from the shift to cloud, growing to almost $1.8 trillion in 2025, according to Gartner.

Accelerating levels of cloud adoption has been the norm over the past two years as organizations responded to a new business and social dynamic induced by COVID-19. In fact, the rate of cloud shift is proving to be faster than pre-COVID-19 forecasts indicated.

 In 2022, traditional offerings constitute nearly 60% of the addressable market opportunity, but growth in traditional markets will be much lower than cloud.
 In 2022, traditional offerings constitute nearly 60% of the addressable market opportunity, but growth in traditional markets will be much lower than cloud.

Demand for integration capabilities, agile work processes, and composable architecture will drive continued shift to the cloud, as long-term digital transformation and modernization initiatives are brought forward to 2022. Technology and service providers (TSPs) that fail to adapt to the pace of cloud shift face increasing risk of becoming obsolete or, at best, being relegated to low-growth markets. 

Ongoing disruption will be amplified by the introduction of new technologies, including distributed cloud, which brings public cloud services into domains that have historically been non-cloud, expanding the addressable market. Distributed cloud appeals to organizations due to its ability to meet location-specific requirements such as network bandwidth, regulatory compliance and data sovereignty.

To capture the market opportunities associated with cloud computing, TSPs must target segments where cloud shift is occurring most aggressively, in addition to seeking new high-growth cloud opportunities.

Read the full report by Gartner.

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