Total cloud expenditure in 2019 exceeded US$107 billion, up 37% from 2018. The expansion of the IT industry fuelled by digital transformation initiatives across all industry sectors.
Canalys attributes this growth to increased spending on compute, storage and other on-demand cloud-based services.
No matter the industry, organisations are transitioning to become technology providers noted Canalys chief analyst Alaister Edwards. He added that many are using a combination of multi-clouds and hybrid IT models, recognising the strengths of each cloud service provider and the different compute operating environments needed for specific types of workloads.
With maturing customer engagements, organisations are committing to longer-term multi-year agreements with cloud service providers, as they move from ad-hoc and uncontrolled use to a more managed and predictable approach.
“The role of channel partners will become more important, as cloud use increases, in terms of defining application strategies, integration into business processes, optimizing user experience, governance and compliance, as well as securing data and workloads,” said Edwards.
Canalys predicts that more and more business applications will operate in public clouds environments over the next five years. Organisations will look to take advantage of the unlimited access to capacity, more advanced services, such as AI and analytics, as well as APIs and other tools to accelerate their digital development. Cloud infrastructure services spending will grow 32% in 2020 to US$141 billion, growing to more than US$284 billion in 2024.
Canalys says the growing demand for cloud services is placing more pressure on the underlying data centre infrastructure. The super seven cloud builders – Alibaba, Amazon, Baidu, Facebook, Google, Microsoft and Tencent – collectively spent more than US$60 billion in 2019 on data centre infrastructure.
Matthew Ball, principal analyst with Canalys commented that cloud service providers are having to carefully manage capital expenditure to balance rising costs with the need to add more capacity, expand geographically and refresh existing assets.
“Increasing cost pressures combined with performance advances are extending the average life of servers in cloud service provider environments are extending the average life of servers in cloud service provider environments beyond the typical three-year period. But these will continue to be the largest buyers of servers and related components over the next five years,” said Ball.