Gartner: Global End-User Spending on Public Cloud Almost $600 Bn by 2023

Gartner

According to the most recent projection from Gartner, global end-user expenditure on public cloud services would increase by 20.7% to $591.8 billion in 2023 from $490.3 billion in 2022. This is greater than the 2022 growth prediction of 18.8%.

“Current inflationary pressures and macroeconomic conditions are having a push and pull effect on cloud spending,” said Sid Nag, Vice President Analyst at Gartner. “Cloud computing will continue to be a bastion of safety and innovation, supporting growth during uncertain times due to its agile, elastic, and scalable nature. Yet, organizations can only spend what they have. Cloud spending could decrease if overall IT budgets shrink, given that cloud continues to be the largest chunk of IT spend and proportionate budget growth.”

SaaS, PaaS

Sid Nag, VP Analyst at Gartner
“Gartner anticipates that PaaS and SaaS will be the two services that are most significantly impacted by inflation,” said Sid Nag, VP Analyst at Gartner.

“Cloud migration is not stopping,” added Mr. Nag. IaaS will naturally continue to grow as businesses accelerate IT modernization initiatives to minimize risk and optimize costs. 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.”

Due to staffing issues and the emphasis on margin protection, Gartner anticipates that Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS) will be the two services that are most significantly impacted by inflation. Gartner predicts that both sectors will continue to grow in 2023, with SaaS segment growth of 16.8% and PaaS segment growth of 23.2% respectively.

“Higher-wage and more skilled staff are required to develop modern SaaS applications, so organizations will be challenged as hiring is reduced to control costs,” added Nag. “But since PaaS can facilitate more efficient and automated code generation for SaaS applications, the rate of PaaS consumption will consequently increase.”

“Despite growth, profitability and competition pressures, cloud spending will continue through perpetual cloud usage,” concluded Mr. Nag. “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.”