Report: Public cloud spending to double, hitting $195B by 2020

Good news for Red Hat, IBM, Lenovo, Cisco, Oracle, Dell, NetApp, EMC and all those other firms focused on “cloud” computing: Business is going to get even better in terms of cloud-related software and services.

In fact, cloud software spending is growing so large that IDC says within five years will account for a quarter of business software sales.

Spending on public cloud services will grow at better than 20 percent a year and double by 2020 to $96.5 billion, says a new report from International Data Corporation.

The U.S. will remain the top market, generating some two thirds of that revenue.

“Cloud computing is breaking down traditional technology barriers as line of business leaders and their IT organizations rely on cloud to flexibly deliver IT resources at the lower cost and faster speed that businesses require. Organizations across all industries are now free to adapt to market changes quicker and take more risks, as they are no longer bound by legacy IT constraints,” said Eileen Smith, program director, Customer Insights and Analysis.

IDC issued the new report Thursday.

Leading the way in spending will be cloud software, however, not hardware.

“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,” said Benjamin McGrath, senior research analyst for SaaS and Business Models at IDC. “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.”

IDC breaks down cloud software in three areas:

Applications as a service
System infrastructure software (SIS) as a service (which combine to form SaaS)
Application development and deployment (AD&D) or platform as a service (PaaS)

The software accounted for nearly 84 percent of public cloud revenue in 2015, IDC notes.

However, infrastructure as a service, which netted the remainder of 2015 revenues, is forecast to grow fastest over the next five years along with PaaS.

Spending leaders in terms of clients by vertical markets are: