From The Expert Feature Article
February 01, 2013

Growth of Enterprise Cloud Expected to Slow Over Next Five Years

While cloud adoption continues to climb, the growth market for enterprise cloud-based services is expected to decrease over the next five years as the size of the overall cloud services market expands.

The worldwide market for enterprise cloud-based services is expected to grow from $18.3 billion in 2012 to $31.9 billion in 2017, according to the latest forecast by research firm Analysys (News - Alert) Mason. By comparison, the firm previously predicted cloud computing services would grow from approximately $13 billion in annual revenue in 2010 to more than $35 billion in 2015.

The forecast for enterprise cloud services growth is more pessimistic than last year and Analysys Mason expects IT spending to continue to slow in developed regions. Enterprise cloud services will continue to grow, but not at the same pace as vendors and service providers have expected, Steve Hilton, principal analyst and author of the report, told TMCnet.

“Challenges from the global economy, hesitancy to transition to hosted services and concerns about data security have impeded growth slightly,” Hilton explained. “That being said, we anticipate continued large enterprise and SME interest in specific cloud services like UC, email/messaging, document collaboration, CRM, storage, mobile device management and remote desktop support.”

Specifically, the year-on-year growth rate is forecast to be 17 percent in 2013, but will decrease during the next five years as the size of the cloud services market increases overall.

Software-as-a-Service (SaaS (News - Alert)) accounted for 66 percent of revenue in 2012, while 33 percent was related to infrastructure-as-a-Service (IaaS). This revenue split will change during the next five years, as the share of revenue from IaaS increases to 43 percent by 2017.

Analysys Mason defines “public cloud services” as the provision of applications or infrastructure in a hosted, multi-tenancy model, where pricing is generally structured as a recurring charge.

“This slowing of growth is the result of difficult economic conditions worldwide and slower-than-anticipated adoption of new IT technology by both large and small enterprises,” the report said.

In developed countries, revenue from enterprise cloud services will increase from $17 billion in 2012 to $28.7 billion in 2017, at a CAGR of 11 percent. In emerging markets, revenue from such services will remain far smaller, increasing from $1.2 billion in 2012 to $3.2 billion in 2017, at a CAGR of 20.9 percent.

The share of worldwide enterprise public cloud services revenue generated from emerging markets will be slightly above 10 percent by 2017 – up from 7 percent in 2012.

Communications service providers (CSP (News - Alert)) will account for an increasing share of enterprise cloud services sales as they bundle more offerings with core connectivity. CSPs will account for 12 percent of worldwide revenue from enterprise cloud services in 2012 – down from 14 percent from Analysys Mason’s previous forecast, as CSPs continue to position themselves as ICT providers rather than communications providers to large enterprises and small and medium-sized enterprises (SME).

Analysys Mason’ recently published “Enterprise cloud services: worldwide forecast 2012–2017,” provides a five-year forecast of cloud services revenue worldwide, split into four enterprise size segments, four channels to market, eight geographical regions and 12 countries.

Edited by Braden Becker

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