A new report from research firm IDC projects that spending for public cloud services will surge more than 24 percent this year with SaaS leading the way. Cloud growth is nearly seven times that of overall information technology spending.

IDC’s semiannual Public Cloud Services Spending Guide forecasts some $122.5 billion in cloud services spending this year.

What’s driving the buying?

“While purchase priorities vary somewhat depending on company size, the leading product categories include customer relationship management (CRM) and enterprise resource management (ERM) applications in addition to server and storage hardware,” IDC notes.

The growth continues as the cloud evolves, IDC notes.

“As cloud adoption expands over the next four years, what clouds are and what they can do will evolve dramatically – in several important ways. The cloud will become more distributed (through Internet of Things edge services and multicloud services), more trusted, more intelligent, more industry and workload specialized, and more channel mediated. As the cloud evolves these important new capabilities – what IDC calls ‘Cloud 2.0’ – the use cases for the cloud will dramatically expand,” explains Frank Gens, senior vice president and chief analyst at IDC.

Who are the big spenders?

“In 2017, discrete manufacturing, professional services, and banking will lead the pack in global spending on public cloud services as they look for greater scalability, higher performance, and faster access to new technologies,” said Eileen Smith, program director for Customer Insights and Analysis at IDC. “Combined, these three industries will account for one third of worldwide public cloud services spending, or $41.2 billion.”

The trend of cloud growth continues with the compound annual growth rate from 2015-2020 hitting 21.5 percent.

By 2020, IDC expects cloud spending to hit $203.4 billion.

“Software as a Service (SaaS) will remain the dominant cloud computing type, capturing nearly two thirds of all public cloud spending in 2017 and roughly 60% in 2020,” IDC adds.

“SaaS spending, which is comprised of applications and system infrastructure software (SIS), will in turn be dominated by applications purchases, which will make up more than half of all public cloud spending throughout the forecast period. However, spending on Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) will grow at much faster rates than SaaS with five-year CAGRs of 30.1% and 32.2%, respectively.”

Fastest growing cloud segments include:

  • Professional services (23.9% CAGR)
  • Retail (22.8% CAGR)
  • Media (22.5% CAGR)
  • Telecommunications (22.1% CAGR)

The U.S. market will generate the most business at more than 60 percent of cloud related revenues, IDC adds, although its CAGR is expected to be slightly less than other major geographies.