The worldwide public cloud market is set to withstand coronavirus-caused market contraction, with revenue projected to reach $257.9 billion in 2020, a 6.3% increase over last year, Gartner said in a forecast released Thursday. In a November forecast, the analyst firm said the public cloud market would grow 17% in 2020, reaching $266.4 billion in revenue.
The largest cloud market, software as a service revenue is expected to grow 2.6% reaching $104.7 billion this year. Infrastructure as a service is also expected to maintain strong growth, reaching $50.4 billion, up 13.4% year-over-year.
The greatest expected growth is in the desktop as a service market where revenue is set to almost double, reaching $1.2 billion in 2020, well over last year's $616 million. Growth in the segment is attributable to the increase in the remote workforce and the proliferation of apps no longer running on premise, Sid Nag, research vice president at Gartner, told CIO Dive. With applications running in the back-end of cloud data centers, the desktop is no longer as rich of a functionality.
Despite cross-segment dips in projected IT spending, a 7.3% drop from 2019, Gartner has remained bullish on cloud investments. With offices physically unavailable, cloud-based technology proved its reliability for continuing operations, according to Nag.
Public cloud revenue in 2020 supported by strong growth in IaaS, PaaS
The push for most organizations was to conserve cash in 2020, he said. Though discretionary spending is paused, there's going to be a significant upsurge.
With reduced spending, companies had to rethink technology investments, shifting technology priorities to support business continuity and initiatives that support growth. For many, that actually sparked an acceleration of cloud adoption.
While SaaS is still set to grow, the projections from last year had it growing 16.6%, reaching $116 billion this year. Reduction in the SaaS market is largely due to the ERP forecast, according to Nag. This year, 90% of companies delayed new software projects on the ERP side.
The Hershey Company was one of the companies taking a "prudent approach" to ERP systems. In April it announced it would pause parts of its ERP implementation, delaying supply chain and order-to-cash functionalities by one year.
The only public cloud segment forecast to shrink is business process services, with revenue down 4% to $43.4 billion. A return to growth is expected in 2021.