We sized the enterprise IT hardware market at $143b in a recent research paper. Now it’s time to look at cloud services – Infrastructure and Platform ‘as a Services’ are alternatives to building and maintaining your own data centre, while Software as a Service is an alternative to running application software within them. The Figure shows the quarterly development of the three cloud service types with a forecast to 2020. The total was worth $94b in the year to the end of June and will grow to be $206b by 2020 and – while the majority of this will be SaaS, there are clearly a shift going on in data centre ownership away from enterprise customers and towards service providers and software companies.
You’ll be interested to learn more about the market leaders and revenue trends and the consequences for your IT usage going forward.
IBM is the leader in cloud services worldwide in the year to the end of June – its $5.8b revenues giving a share of 6.2% of the total. It is second currently in IaaS/PaaS, where Amazon Web Services is the leader with a 12.1% share of the $45b total; as it is in SaaS, where Salesforce.com has 11.1% of the $49b market.
IBM has been eager to embrace all kinds of cloud computing delivery of its services to customers; buying SoftlLayer demonstrated its decision to be a direct player. Amazon’s success has been startling given the fact its an on-line sales specialist, rather than an IT supplier. Salesforce.com has been the stand-out SaaS player since the market started. Many systems vendors have decided to remain ‘cloud builders’ – helping to build cloud solutions for their enterprise and service provider customers. Quite a few provide turn-key private clouds and managed services and providing some of their software applications and tools as SaaS.
It’s not just a change in your offerings you need for success in the cloud: you also need to change your accounting systems and revenue expectations: for instance IBM’s growing cloud business will smooth down the massive fourth quarter revenue humps created by its salesforce pushing big iron into the market before the close of each year.
So what of regional adoption? Much has been written about the disparity between regions and the comparatively weak adoption of cloud services outside America. Our Figure shows our research results: The Americas continue to outstrip EMEA and Asia Pacific in revenues – so if 2015 is ‘the year’ of cloud adoption in Europe, its because the overall market is still growing considerably, rather than because it’s catching up. The again we have shown these figures in current dollars rather than local currency (see our recent paper on the massive differences between the two).
Despite the strong growth and a rosy future, it’s worthwhile noting that IaaS/PaaS only account for 4% of total IT service revenues in the last year and SaaS, 6% of all software and our forecasts are that they’ll be 6% and 13% of these markets in 2020. Looking at it a different way – there are lots of IT services and software that will never be ‘cloudified’ into a ‘pay-as-you go’ model. Spending shifts to Op Ex in a downturn before Cap Ex secretly grows as markets recover. It’s possible that a strong recovery in a couple of years time will slow the cloud services market. Alternatively it’s possible that cloud really is just another delivery method and that it will lose its cache: perhaps salesforce.com is just a ‘service’ and we should stop being surprised or impressed that it’s delivered via modern techniques.
Further reading: for cloud services definitions see our earlier paper.
Very informative post, plus nice and pithy