A forecast published this week by Gartner suggests that the spending on various cloud services will continue to accelerate through 2020. However, the Gartner report also predicts that 60 percent of organizations will be employing managed services provided by cloud service providers by 2022.
Overall, Gartner predicts the worldwide public cloud services market will grow 17 percent in 2020 to total $266.4 billion, up from a $227.8 billion that Gartner expects will have been spent this year.
Breakdown of cloud segments
The single largest segment of the cloud will remain Software-as-a-Service (SaaS) applications. Rather than buy packaged applications that are deployed on-premises, more organizations find it easier to consume applications as a service. SaaS applications are expected to account for $116 billion of the $266.4 billion expected to be spent in 2020.
However, the highest growth rate (24 percent) will be in the Infrastructure-as-a-Service (IaaS) segment, which is expected to reach $50 billion in 2020. Gartner predicts the Platform-as-a-Service (PaaS) segment of the market will reach $39.7 billion in the same time frame, up from $32.2 billion in 2019.
Gartner is predicting there will be a sharp increase in the amount of managed services being consumed largely because of the transition to cloud-native applications. While the first era of the cloud was marked by the deployment of monolithic applications on public clouds, this next era is being driven by the rise of microservices based applications built primarily using containers.
Application developers are making this shift because this architectural approach not only makes it simpler to continuously update software components; it also results in more resilient applications that are less prone to crashing. However, these microservices-based applications are also more challenging to support, which is why Gartner expects many organizations to increase their reliance on managed services.
What’s next for service providers?
The decision managed service providers (MSPs) need to make now is to what degree they are willing to cede that opportunity to cloud service providers. On one hand, cloud service providers have an advantage because they are essentially upselling a set of managed services offerings to an installed base of customers. However, cloud service providers are not especially well regarded in terms of the level of support they are willing to provide.
More importantly, most organizations by 2020 are likely to be using multiple clouds. An MSP that provides a high-level of service and support across workloads spanning multiple clouds should be able to differentiate themselves from Amazon Web Services (AWS) and Microsoft.
Moving forward, we will see that more organizations will be driving toward hybrid cloud computing models that won’t rely on a single control plane provided by any one cloud service provider. The main goal is to not just unify the management of public clouds and on-premises IT environments, but also prevent organizations from finding themselves locked into a specific cloud service provider.
Obviously, the relationship between cloud service providers and MSPs going forward is going to be complicated. Despite their size, MSPs should not be intimidated by all the managed services being provided by cloud service providers. In many ways, those cloud service providers are creating demand for a personalized managed services experience that they are simply too big to deliver.
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