Public cloud market ready for 'hypergrowth' period

Cloud technologies will increasingly replace in-house enterprise and small business systems, Forrester predicts

The public cloud market is set for what one analyst firm calls "hypergrowth."

The global public cloud market is expected to hit $191 billion by 2020, according to a report released today by Forrester Research. That's a 20% jump from Forrester's last forecast, which was released in April, 2011, that predicted the market would be $160 billion by 2020.

It's also a big jump from where the market is today -- Forrester says the market stood at $58 billion at the end of 2013.

"You need to update your forecast to keep up with reality," said Andrew Bartels, an analyst with Forrester. "Now we have a new set of numbers to work with. One of the key trends behind this is that the cloud is starting to shift from a complement to a replacement for existing technology."

Breaking down the public cloud market into segments, Forrester predicts that the global public cloud platform services will hit $44 billion by 2020, the cloud business services should reach $14 billion and the cloud applications, or software-as-a-service (SaaS) market, will hit $131 billion.

"Much of the growth is initiated by line of business and marketing and strategy leads, though CIOs and their technology management organizations are increasingly expected to be driving these initiatives," the report noted. "For CIOs, the message is clear: 'Shift into the driver seat, or others will.'"

The report says the better-than-first-expected public cloud growth can be traced to the increasing number of businesses looking to increase agility without boosting costs, and giving mobile users more functionality and modernized applications.

Bartels said the biggest shift in the public cloud market is the number of businesses going all-in with the cloud rather than using the technology to complement in-house systems.

"Complementing on-premise technology is still the dominant pattern," he noted. "But there are clear examples that the cloud will become a replacement. Many start-up companies are going directly to cloud platforms. Over time, those new companies will become a larger part of the economy and a growing proportion of cloud business. It's not the major part of it today but it's clearly happening."

The Forrester report also cited reasons that some enterprises and small businesses are hesitant to jump into the cloud -- concerns about security, integration, performance and cost models.

Zeus Kerravala, an analyst with ZK Research, said he's not surprised that companies are worried about the costs associated with the cloud, even though lower costs are cited as an advantage of the technology.

"Sure, it can be cheaper to run on the cloud but there are hidden costs to migrating to it," he explained. "People also are worried about data sovereignty. Where will the company data reside geographically? Many companies do not want their data stored outside the country."

Forrester today also said it's projecting that the U.S. tech market will grow by 5.9% in 2014 and 6.6% in 2015.

Bartels told Computerworld that part of the increased spending will be on cloud technologies.

"Part of the story with the cloud is that it has a delaying effect on the type of spending we'll be seeing," he added.

"Instead of committing capital up front by buying servers or other hardware, you're paying into the future with the cloud. When you go with a SaaS vendor, typically it's a three- or five-year commitment. As the cloud becomes more common, it reduces near-term spending and increases long-term spending," he added.

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin, on Google+ or subscribe to Sharon's RSS feed . Her email address is

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Copyright © 2014 IDG Communications, Inc.

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