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IaaS set to surpass SaaS spending in 2017 and be a major driver of growth

28 Jul 2017

It is set to be a year of firsts for the public cloud services (PCS) market in Asia Pacific excluding Japan (APEJ) in 2017.

Not only has IDC forecast the market to exceed the US$10 billion mark this year, but the global provider of market intelligence has predicted the infrastructure-as-a-service (IaaS) market to drive the growth of the PCS market, leading to IaaS spending surpassing Software-as-a-service (SaaS) spending for the first time in the first half of 2017.

Senior market analyst for IDC APAC’s Service’s Research team, Liew Siew Choon says digital transformation is driving multi-cloud and hybrid IT environments for enterprises to create a more agile and cost-effective IT environment

Even heavily regulated industries like banking and finance are using SaaS for non-core functionality, Platform-as-a-service (PaaS) for app development and testing, and IaaS for workload trial runs and testing for their new service offerings, says Liew.

"As enterprises are exploring different cloud options for different workloads, most enterprises have hybrid IT strategies with dispersed IT assets and workloads across onsite and offsite datacenters.”

According to Liew, the modern applications that support innovation accelerators such as Internet of Things (IoT) and cognitive systems will further increase the adoption of public cloud services.

Findings from the IDC study reveal the top three PCS provider in the APEJ region in 2016 are Amazon Web Services, Microsoft, and Alibaba Group with more than 50 percent of the market share.

“These top providers have very credible IaaS offerings, as well as PaaS and SaaS offerings. For Microsoft, its IaaS revenue contribution has also surpassed SaaS (which is mainly Office 365) (O365) revenue contribution by end of 2016,” says Liew.

“Contrary to popular belief, Microsoft’s public cloud revenue is actually gaining more from Azure apart from O365 in APEJ.”

The latest IDC Worldwide Semiannual Public Cloud Services has predicted IaaS spending in APEJ to reach $4.8 billion in 2017, largely driven by a whopping 35.8 percent year on year growth from the previous year.

SaaS and PaaS spending in the region is also expected to grow significantly year on year with 29 percent and 37.2 percent respectively.

With data growth at an exponential rate, a scalable and rapid processing infrastructure from IaaS providers is increasingly demanded by enterprises for better resource utilization and cost savings,” Liew says.

According to IDC, another driver of growth is risk management – an area where IaaS has been used immensely for data backup and recovery.

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