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IDC forecasts cloud spending to reach $1.3 trillion by 2025

By Ryan Morris-Reade
Thu 16 Sep 2021

International Data Corporation has forecast global "whole cloud" spending to reach $1.3 trillion by 2025.

Cloud computing has become the foundation for the delivery of mobile and content services over the past decade and an alternative to traditional enterprise computing environments. As businesses pivot to a digital-first economy, the cloud will continue to play an ever-greater role as the IT industry focuses on delivering greater efficiency, flexibility, and faster innovation. 

International Data Corporation (IDC) forecasts "whole cloud" spending, which is total worldwide spending on cloud services, the hardware and software components underpinning the cloud supply chain, and the professional and managed opportunities around cloud services, will surpass $1.3 trillion by 2025 while sustaining a compound annual growth rate (CAGR) of 16.9%.

"In today's digital-first world, business outcomes and innovation are increasingly tied to the ability to develop and use innovative technologies and services anywhere, as quickly as possible," says IDC group VP, Worldwide Research, Rick Villars.

"Cloud is the foundation for meeting this need. Entire industries want to intelligently leverage data to their advantage and can do so because they have faster access to digital technologies built on a cloud foundation."

IDC's forecast looks at shared (public) cloud services and dedicated (private) cloud services. 

These are defined as follows:

  • Shared cloud services are shared among unrelated enterprises or consumers, open to a largely unrestricted universe of potential users, and designed for a market, not a single enterprise.
  • Dedicated cloud services are delivered as subscriptions or managed service agreements provided by cloud, location, outsourcing, or managed service providers to their enterprise customers.

Shared Cloud as-a-Service for infrastructure, platforms, and various software offerings continues to be the largest expanding engine of growth for the whole cloud market. 

Combined spending on shared cloud services Infrastructure-as-a-Service (IaaS), System Infrastructure Software as-a-Service (SISaaS), Platform as-a-Service (PaaS), and Software as-a-Service (SaaS) will total $385 billion in 2021 and will see a CAGR of over 21.0% through 2025, reaching $809 billion.

Dedicated cloud services, including hosted private cloud services and the fast-emerging Dedicated Cloud Infrastructure as-a-Service (DCIaaS) segment, will grow at a faster CAGR of 31.0%, but from a much smaller revenue base of $5 billion in 2021.

The as-a-Service segments of cloud spending, combining Shared Cloud as-a-Service and Dedicated Cloud as-a-Service, will account for the majority of all cloud spending throughout the forecast, growing from 55.7% in 2021 to 64.1% in 2025. These segments will also see the fastest growth in spending, with a five-year CAGR of 21.3%.

Cloud build out, the hardware, software, and standard support services for these cloud assets, represents the most critical area of cloud spending outside the as-a-Service segments. 

The two remaining segments of cloud spending that are not part of the as-a-Service total are cloud-related professional services and managed cloud services. 

Cloud-related professional services encompass a range of project-based services, such as strategic planning, assistance in implementing or adopting all types of cloud services, and other projects requiring a cloud delivery capability as a foundational element. 

Managed cloud services provide management capabilities to ensure 24x7 operations of cloud technologies and architectures, both applications and infrastructure, and associated business processes and "embedded" professional services.

"With enterprises focusing more on outcomes in their cloud selection processes, the long-term focus for all cloud providers will be on strengthening their relationships with business, not IT, from device, to edge, to network, to core," says Villars.
 

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