News: Cloud software to significantly outpace traditional software products.
Cloud technology may already be considered by many to be ubiquitous but the market is going to grow considerably according to IDC.
In the firms Public Cloud Services Spending Guide it says that spend on Software-as-a-Service, Infrastructure-as-a-Service, and Platform-as-a-Service stands at $96.5bn in 2016. This figure is going to more than double by 2020 to $195bn at a compound annual growth rate of 20.4% between 2015 and 2020.
“By 2020, about half of all new business software purchases will be of service-enabled software, and cloud software will constitute more than a quarter of all software sold,” said Benjamin McGrath, IDC senior research analyst for SaaS and Business Models.
"Cloud software will significantly outpace traditional software product delivery over the next five years, growing nearly three times faster than the software market as a whole and becoming the significant growth driver to all functional software markets,” McGrath continued.
All of this sounds like good news for vendors that are selling cloud and a little worrying for those that continue to sell on-premise software.
While the figures don’t identify the death of on-premise software, it does highlight that the market is steadily shifting to a cloud first and cloud only model for software, infrastructure, and platforms.
Numerous vendors have already identified that they need to change their models with companies like Oracle, and SAP shifting to becoming cloud companies, away from their traditional on-premise software base.
For those companies this report is good news as it suggests that their transitions will continue to be boosted by the changing business strategy, however, it should be remembered that for companies like Oracle and SAP, the majority of their money still comes from on-premise software.
The result of this change on the vendors will be a completely different model for how they get their money, no longer will it be software and maintenance licenses bringing in the money but cloud subscriptions.
What is clear is that cloud is far from being done as a disruptive force.