Gartner: Public Cloud Spending Set For Over 20% growth

End user spending on public cloud services is projected to grow by more than 20% next year as organizations look to the cloud to help support growth amid economic uncertainties, according to new Gartner analysis.

The Stamford, Conn.-based analyst firm’s forecast of public cloud end user spending paints a picture of how organizations are viewing the cloud and how it can give them agility and the ability to scale along with the economy and their financial outlook.

In total, Gartner expects public cloud services spending to hit $591.8 billion, good for a 20.7% increase from the $490.3 billion being spent on cloud services in 2022. Cloud spending was forecast to grow by 18.8% this year, so the firm expects even more robust growth in 2023.

Infrastructure-as-a-service budgets are expected to experience the highest end-user spending growth in 2023 at 29.8% growth, while every other public cloud services category is also expected to grow next year. That includes cloud application infrastructure services (PaaS) and Cloud applications, or software-as-a-service (SaaS), which are expected to grow 23.2% and 16.8%, respectively.

Source: Gartner

Sid Nag, a vice president analyst at Gartner, says while public cloud computing offers scalability and agility, cloud spending could fall off if overall IT budgets shrink. However, IT budgets are still expected to remain robust, even in the face of a recession. Gartner’s recent IT spending forecast projects a 5.1% increase for next year, with much of it driven by the cloud.

Cloud migration, Nag says, is not stopping.

“IaaS will naturally continue to grow as businesses accelerate IT modernization initiatives to minimize risk and optimize costs,” Nag says. “Moving operations to the cloud also reduces capital expenditures by extending cash outlays over a subscription term, a key benefit in an environment where cash may be critical to maintain operations.”

According to Nag, more expensive and skilled staff are required to develop modern SaaS applications, so organizations will be challenged as hiring is reduced to control costs. However, PaaS can facilitate more efficient and automated code generation for SaaS applications, so the rate of PaaS consumption will consequently increase.

“Despite growth, profitability and competition pressures, cloud spending will continue through perpetual cloud usage,” Nag adds. “Once applications and workloads move to the cloud they generally stay there, and subscription models ensure that spending will continue through the term of the contract and most likely well beyond. For these vendors, cloud spending is an annuity – the gift that keeps on giving.”

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