While only 38 percent of organizations leverage cloud services, worldwide spending on public IT cloud services continues to grow and is expected climb to over $107 billion in 2017.
A recent International Data Corporation (IDC) forecast calls for public IT cloud services to rise at a compound annual growth rate (CAGR) of 23.5 percent between 2013 and 2017, five times the rate of the IT industry as a whole.
These numbers push cloud computing into a second phase, where cloud adoption will not only be bigger, but also more solution and user-driven.
IDC Senior Vice President and Chief Analyst Frank Gens said in his prepared remarks that the first wave of cloud service adoption focused on improving IT departments and efficiency, specifically.
"Over the next several years, the primary driver for cloud adoption will shift from economics to innovation as leading-edge companies invest in cloud services as the foundation for new competitive offerings," he said.
Cloud deployment options have increased, including the adoption of virtual private clouds (VPCs) -- the ideal option for skeptical cloud customers. A VPC combines the attributes of the public cloud with some of the control and privacy features of the private cloud, shifting momentum from dedicated private cloud offerings toward public cloud offerings.
But growing commoditization and competition is expected to bring about consolidation in basic cloud services, forcing vendors to expand their offerings toward higher value services, the report said.
"In this second phase of cloud development, it will be essential for cloud services providers to reexamine their cloud strategies, preparing for a marketplace focused intensely on business innovation, industry transformation, and increasingly pressured pricing and operating models," Gens said. "How suppliers navigate the next two years will tell us a lot about who the IT market leaders will be for the next two decades."
According to IDC, by 2017, public IT cloud services will drive 17 percent of IT product spending and nearly half of all growth across five technology categories, which include applications, system infrastructure software, platform as a service (PaaS), servers, and basic storage. Software as a service (SaaS) will continue to remain the largest public IT cloud services category throughout the forecast.
The report said the United States will remain the largest public IT cloud services market, although its share will decline from 56.9 percent in 2013 to 43.9 percent in 2017.