SaaS, PaaS Spending To Outpace Estimates in 2017

Higher-than-expected spending in the Software as a Service (SaaS) and Platform as a Service (PaaS) categories is driving growth in the overall public cloud services market, according to new data by Gartner.

In its findings released late last week, the research firm said that the worldwide SaaS market roundly beat expectations in 2016, when it raked in $48.2 billion. The story in 2017 will be much the same, said Gartner research director Sid Nag.

"SaaS is also growing faster in 2017 than previously forecast, leading to a significant uplift in the entire public cloud revenue forecast," Nag said in a prepared statement. Specifically, SaaS spending is projected to reach $58.6 billion by year's end, a year-over-year increase of nearly 22 percent.

PaaS spending is also "outperforming previous expectations" in 2017, Nag said, with revenue in this segment expected to grow by nearly 27 percent year-over-year to reach $11.4 billion.

[Click on image for larger view.] Projected worldwide public cloud services revenues, in billions of U.S. dollars. (Source: Gartner)

Gartner attributes the increase in SaaS spending to the ability of vendors to provide well-rounded applications in the cloud without sacrificing functionality. "This appeals to users because SaaS solutions are engineered to be more purpose-built and are delivering better business outcomes than traditional software," the firm said.

Meanwhile, the PaaS segment seems to be riding a wave of increased enterprise confidence. "[E]nterprise-scale organizations are increasingly confident that PaaS will be their primary form of application development platform in the future," Nag said.

He added that the growing demand for SaaS and PaaS has prompted old-guard software vendors like Microsoft, SAP and Oracle to focus more on cloud-based subscription services, perhaps at the expense of traditional on-premises products.

The Infrastructure as a Service (IaaS) segment, in which Amazon Web Services (AWS) is the runaway leader, is expected to clock the highest growth rate this year. IaaS spending is expected to reach $34.7 billion by the end of 2017, an increase of almost 37 percent over 2016.

Overall, public cloud services spending is set to grow by over 18 percent in 2017, reaching $260.2 billion.

About the Author

Gladys Rama (@GladysRama3) is the editorial director of Converge360.


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