If a new U.S.-based In-Stat LLC forecast is any indication, public cloud offerings are not being widely adopted by large enterprises.
The Scottsdale, Az. research firm said public cloud spending by U.S. businesses will reach US$11 billion by 2014, up from roughly $5 billion in 2010. Another $2 billion can be added to the projection if factoring managed and co-location services into the equation.
But despite the large number, 65 per cent of all that spending will be concentrated in the smallest of businesses, according to Greg Potter, a research analyst with In-Stat. With the small business (1 to 99 employees) and home office segment leading the adoption, Potter said, all indications are that large enterprises are choosing to keep their cloud investments internal.
“Large businesses are going to end up using hybrid clouds, with internal private cloud services driving the majority of the investment,” he said.
Although some U.S. cities — such as Los Angeles and Washington D.C. — have adopted public cloud offerings like Google Docs, those cases are not typical, Potter said.
“I pay attention to what other research companies are saying and I’ve found they overestimated the market a little bit,” he said. “I think there’s a lot of hype in the public cloud market.”
In-Stat breaks down public cloud offerings into three groups: software-as-a-service (SaaS), platform-as-a-service (PaaS), and infrastructure-as-a-service (IaaS).
In its latest report, the research firm said SaaS spending will increase from $3.2 billion in 2010 to $6.7 billion in 2014, IaaS will grow from $1.6 billion to $3.6, and PaaS will rise from $200 million to $450 million. Potter added that the professional services and health care verticals lead the way, in terms of the largest growth on public cloud spending.
He added that after his initial research on public clouds, he expects larger spending numbers for the private cloud market.
Nigel Wallis, a research director for IDC Canada Ltd.’s application solutions research group, said his firm includes SaaS, PaaS, IaaS and public server and storage services under the public cloud umbrella.
“We look at the market in Canada being around $256 million in 2009 and growing at a 30 per cent CAGR between 2010 and 2014,” he said. By 2014, IDC Canada expects the public cloud spend to be $930 million.
“As a portion of the overall software market, it’s probably going to be 8 per cent of the Canadian software market.”
While it has not been able to completely finish its 2010 report, IDC Canada anticipates the 2010 public cloud market in Canada will reach $325 million.
As for what impact the 2008 global economic crisis had on the current public cloud market, Potter said the financial setback might have actually increased spending at many businesses. Companies were moving to the public cloud for the cost saving advantages, he said.
While Potter’s research does project 124 per cent growth for the market from 2010 to 2014, this spending is still just a blip on the radar of the overall IT spend. IDC Corp. said last month that global IT spending could reach $1.6 trillion in 2011, with rival research firm Gartner Research Inc. projecting $2.5 trillion in spending for the upcoming year.
In a recent Gartner survey of 1,587 CIOs across 40 countries, the firm found that 39 per cent of respondents allocated some of their IT budget to cloud computing.
In the same survey, Gartner also found that companies spend around 10.2 percent of their budget for external IT services on cloud computing and that 46 per cent of respondents with a cloud computing budget planned to increase their public cloud investments.
Gartner asked how organizations’ budgets for cloud computing were distributed.
“One-third of the spending on cloud computing is a continuation from the previous budget year, a further third is incremental spending that is new to the budget, and 14 percent is spending that was diverted from a different budget category in the previous year,” said Bob Igou, research director at Gartner.
– With files from Anh Nguyen, ComputerWorld U.K.