At AWS re:Invent 2017, 451 Research is revealing how quickly enterprises are moving to hybrid and multi-cloud environments; the growth of the cloud market to $53.3 billion in 2021 from $28.1 billion this year; and the impact of cloud service providers’ ever-expanding portfolio of offerings. 

According to 451 Research’s most recent Voice of the Enterprise: Cloud Transformation survey, the future of IT is multi-cloud and hybrid with 69% of respondents planning to have some type of multi-cloud environment by 2019.

The growth in multi- and hybrid cloud would make optimizing and analyzing cloud expenditure increasingly difficult. 451 Research’s Digital Economics Unit has analyzed the scope of AWS offerings and reveals that there are already over 320,000 SKUs in the cloud provider’s portfolio. This complexity is likely to increase over time – in the first two weeks of November 2017, for example, AWS added more than 53,000 new SKUs.

Cloud Pricing Models

Cloud is now mainstream with 90% of organizations surveyed using some type of cloud service. Moreover, analysts expect 60% of workloads to be running in some form of hosted cloud service by 2019, up from 45% today. This represents a pivot from DIY owned and operated to cloud or hosted third-party IT services.

“Cloud buyers have access to more capabilities than ever before, but the result is greater complexity,” said Dr. Owen Rogers, Research Director at 451 Research. “It is a nightmare for enterprises to calculate the cost of computing using a single cloud provider, let alone comparing providers or planning a multi-cloud strategy. The cloud was supposed to be a simple utility like electricity, but new innovations and new pricing models, such as AWS Reserved Instances, mean the IT landscape is more complex than ever.”

Flexibility has become the new pricing battleground over the past three months, with Google, Microsoft and Oracle all announcing new pricing models targeted at AWS. Analysts believe there will be a market opportunity for cloud dealers that can resolve this complexity, giving users simple and low-cost prices – similar to how consumer energy suppliers abstract away the complexity of global energy markets.

Cloud Market Growth

The latest data from 451 Research’s Market Monitor finds that the cloud computing as a service market is expected to grow 27% to $28.1 billion in 2017 compared to 2016. With a five-year CAGR of 19%, cloud computing as a service will reach $53.3 billion in 2021.

The report examines revenue generated by 451 global cloud service providers across Infrastructure as a Service (IaaS) and Platform as a Service (PaaS), as well as Infrastructure Software as a Service (ISaaS), which includes IT management as a service and SaaS storage (online backup/recovery and cloud archiving). The report predicts that IaaS will account for 57% of cloud computing as a service revenue in 2017.

451 Research analysts forecast that ISaaS will see the fastest growth through 2021 with a 21% CAGR, while Integration PaaS will be the fastest growth sector within the PaaS marketplace with a five-year CAGR of 27%.

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