Gartner: Top 5 Cloud SaaS, IaaS And Services In $600B Market

CRN breaks down how much worldwide end-user cloud spending can be expected in 2023 from cloud SaaS, IaaS, PaaS and more based on new data from IT research firm Gartner.

Gartner is predicting that total worldwide spending on public cloud services will reach nearly $600 billion in 2023, representing an annual increase of 22 percent, as demand for cloud application and infrastructure services takes off.

By 2026, 75 percent of organizations will adopt a digital transformation model predicated on the cloud as their fundamental underlying platform, Gartner predicted, with hyperscalers Amazon Web Services, Microsoft and Google leading the way.

“Hyperscale cloud providers are driving the cloud agenda,” said Sid Nag, vice president at Gartner, in a statement. “Organizations today view cloud as a highly strategic platform for digital transformation, which is requiring cloud providers to offer more sophisticated capabilities as the competition for digital services heats up.”

[Related: Gartner: Top 5 Markets In $4.6 Trillion Tech Industry For 2023, 2024]

Public Cloud Services Markets

End-user spending on public cloud services reached $491 billion in 2022. Gartner expects this market to increase to $597 billion this year, then grow to $725 billion in 2024.

The five largest markets in end-user spending on public cloud computing services are: Cloud Management and Security Services; Cloud Business Process Services (BPaaS); Cloud System Infrastructure Services (IaaS); Cloud Application Infrastructure Services (PaaS); and Cloud Application Services, which Gartner dubs as SaaS.

Cloud computing services will also have a large impact on the highly popular generative AI movement being led by cloud market-share leaders, such as Microsoft-backed ChatGPT.

“Generative AI is supported by large language models (LLMs), which require powerful and highly scalable computing capabilities to process data in real time,” said Gartner’s Nag. “Cloud offers the perfect solution and platform. It is no coincidence that the key players in the generative AI race are cloud hyperscalers.”

IT research firm Gartner breaks down the financial numbers for the five hottest public cloud services markets that are driving cloud sales: SaaS, IaaS, PaaS, BPaaS, and cloud management and security.

No. 5: Cloud Management and Security Services

2023 Forecast: $ 42.4 billion

2022 Spending: $ 34.5 billion

Spending on cloud management and security services is expected to reach $42.4 billion this year, representing an increase of 23 percent year over year, compared with $34.5 billion in 2022.

Cloud management platforms are integrated products that provide for the management of public, private and hybrid cloud environments. Tied with cybersecurity cloud services, this market will continue to grow next year as well, according to Gartner.

In 2024, Gartner predicts global spending on cloud management and security services will grow to $51.9 billion.

No. 4: Cloud Business Process Services (BPaaS)

2023 Forecast: $ 65.2 billion

2022 Spending: $ 59.9 billion

Worldwide end-user spending on cloud business process services (BPaas) is predicted to hit $65.2 billion in 2023, up 9 percent annually, compared with $59.9 billion in 2022.

BPaaS is the delivery of business process outsourcing services that are sourced from the cloud and constructed for multitenancy. Services are often automated, and where human process actors are required, there is no overtly dedicated labor pool per client, according to Gartner. As a cloud service, the BPaaS model is accessed via internet-based technologies.

Spending on BPaaS is expected to grow at a similar rate in 2024. Next year, BPaaS sales are expected to increase to $71.1 billion.

No. 3: Cloud Application Infrastructure Services (PaaS)

2023 Forecast: $ 139 billion

2022 Spending: $ 112 billion

Global spending on cloud application infrastructure services (PaaS) is projected to reach $139 billion by the end of 2023, representing an annual increase of 24 percent compared with 2022.

PaaS delivers application infrastructure capabilities as a service. This includes application Platform as a Service, integration PaaS (iPaaS), API management PaaS, business analytics PaaS, IoT PaaS and database PaaS.

Spending on PaaS is expected to grow next year, reaching $170.4 billion in sales in 2024.

No. 2: Cloud System Infrastructure Services (IaaS)

2023 Forecast: $ 150.3 billion

2022 Spending: $ 114.8 billion

Gartner expects cloud system infrastructure services (IaaS) to grow faster than any other public cloud service in 2023. IaaS spending will increase to $150.3 billion in 2023, representing an increase of 31 percent compared with $114.8 billion in 2022.

“The next phase of IaaS growth will be driven by customer experience, digital and business outcomes and the virtual-first world,” said Gartner’s Nag. “Emerging technologies that help businesses interact more closely and in real time with their customers, such as chatbots and digital twins, are reliant upon cloud infrastructure and platform services to meet growing demands for compute and storage power.”

IaaS is a standardized, highly automated offering in which computing resources owned by a service provider—complemented by storage and networking capabilities—are offered to customers on demand. Self-service interfaces, such as an API or a graphical user interface (GUI), are exposed directly to customers, Gartner said.

The IaaS market will continue to grow in 2024, reaching an estimated $195.4 billion.

No. 1: Cloud Application Services (SaaS)

2023 Forecast: $ 197.3 billion

2022 Spending: $ 167.3 billion

End users across the globe will spend more on cloud application services, which Gartner defines as public cloud Software as a Service (SaaS), than any other cloud service.

Total spending on cloud application SaaS will hit $197.3 billion in 2023, representing an annual increase of 18 percent, compared with $167.3 billion in 2022.

“The technology substrate of cloud computing is firmly dominated by the hyperscalers, but leadership of the business application layer is more fragmented,” said Gartner’s Nag. “Providers are facing demands to redesign SaaS offerings for increased productivity, leveraging cloud-native capabilities, embedded AI and composability—particularly as budgets are increasingly driven and owned by business technologists.”

Nag said this change will “ignite a wave of innovation and replacement” in the cloud platform and application markets.

In 2024, global spending on cloud application SaaS is projected to increase to $232.3 billion.