Public Cloud Market to Exceed $236B by 2020

The biggest disruptive force in the global tech market over the past two decades is about to get a lot bigger.

In a new report, researchers at Forrester predict the public cloud services market will grow to $236 billion by 2020, more than double the $114 billion public cloud spend worldwide this year.

This dramatic uptick—at an annual growth rate of 23 percent—reflects the massive IT modernization effort amid private sector companies and, to a lesser extent, government.

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According to Forrester, North American and European countries have migrated and are already running approximately 18 percent of their custom-built application software on public cloud platforms, and businesses are increasingly inclined to rent processing and storage from vendors rather than stand up infrastructure themselves.

Forrester also reports many companies are “challenging the notion that public clouds are not suited for core business applications,” opting to move mission-critical workloads to the public cloud for increased agility and efficiency despite perceived myths that public cloud platforms aren’t as secure as internal data centers might be.

Forrester compares the public cloud of today to adolescent children on the fast track to adulthood, suggesting it will be "the dominant technology model in a little over three years.”

“Today’s public cloud services are like teenagers—exuberant, sometimes awkward, and growing rapidly,” the report states. “By 2020, public cloud services will be like adults, with serious [enterprise] responsibilities and slower growth.”

The report has many implications for government. The Obama administration’s fiscal 2017 budget calls for $7.3 billion in spending on provisioned services like cloud computing, and true federal cloud spending is on the rise across civilian, military and intel agencies. An analysis from big data and analytics firm Govini states the federal government spent $3.3 billion on cloud in fiscal 2015 on the backs of infrastructure-as-a-service offerings.

Federal agencies have inched forward in cloud, first with email-as-a-service offerings and later with a growing number of infrastructure-, platform- and software-as-a-service offerings, but they’ve been slowed in part by lagging legacy technologies that tend to make up their enterprise.

The government’s aging systems—some of which date back to the 1970s—are in dire need of modernization, and Congress is currently reviewing legislation that could greatly speed up the effort. One initiative would create a $3.1 billion IT Modernization Fund from which agencies could borrow against, and another that would direct agencies to establish working capital funds for IT.

If either piece of legislation is enacted—or some combination of both—the government’s spend on cloud computing is likely to increase and fall more in line with what industry is doing, using cloud computing as the base for IT enterprises.