Cloud Computing Revenue Numbers
Imagine that your viewpoint is shared by 5% of people. You’d be in a fringe political party, perhaps, or share a fondness for some obscure sport or hobby. Or you’d be a proponent of Cloud Computing.
Because the reality is that after many years of technical development, entrepreneurial freneticism, and big-company marketing, Cloud Computing still commands a very small percentage of total enterprise IT budgets.
I get the specific figure from a recent Goldman Sachs analysis that shows $16 billion spent on cloud in 2014, which it reports as 5% of enterprise IT spending.
More Fun With Numbers
- There are many other available sources for high-level information about cloud expenditures: In-Stat reported a few years ago that $13 billion would be spent on infrastructure-as-a-service (IaaS) in the US in 2014.
- Amazon reported “other” revenue of about $1.6 billion in Q4 2014. Most of that is presumably the company’s AWS public-cloud revenue. The number thus annualizes to more than $5 billion per year.
- SaaS giant Salesforce had revenues of about $4 billion in 2014. This was enough to hire Aerosmith and Hillary Clinton to perform at its Dreamforce event in San Francisco last year, but should be compared to Oracle ($38 billion), SAP (about $18 billion), and wheezy old Microsoft (at $86 billion more than these other three combined).
- Oh, and SAP took pains to note in an official statement last year that its cloud revenue represented about 10% of the company’s total revenue.
- IBM says its cloud revenue, bolstered by its SoftLayer acquisition and its Bluemix strategy (driven by PaaS player Cloud Foundry) will reach $7 billion this year.
- Speaking of PaaS, a few years ago Forrester estimated global PaaS revenue to reach $10 billion in 2015.
- A report last year from 451 Research showed public-cloud revenues of about $16 billion in 2014, with PaaS accounting for about $4 billion of that.
But I tire of projections and reports, each of which measures things slightly differently. The important takeaway is these billions represent a very small percentage of the total enterprise IT spend. The bigger question is how much of the $2.1 trillion annual IT spend (again sourced by Gartner and including datacenter hardware, services, and devices) is being devoted to cloud computing today?
OK, it’s time for the silver lining.
First of all, about 80% of enterprise IT goes to operations and maintenance, leaving a relatively small fraction for the innovation and new thinking that cloud embraces. Second, a large number of those “devices” mentioned by Gartner are mobile and being deployed on the edge of new cloud-computing initiatives. Third, the “services” component of Gartner’s number totals close to $1 trillion, and we should surmise that considerable time, effort, and budget in that category is being devoted to private and hybrid cloud.
We’re still in the Pre-Milton Berle/Ricky-and-Lucy Era of cloud computing. But just as those entertainers drove an enormous uptake in television sales in the 1950s, today’s technology stars are on the cusp of creating similar, precipitous cloud formation.
The 5% number shows how far the industry must advance to achieve cloud computing’s touted advantages of efficiency, agility, flexibility, scalability, and manageability. We should also consider how much of new IT spending is devoted to cloud computing, and what percentage of internal software development is being created for the cloud.
We also need to think of dovetailing Big Data/analytics/IoT deployments, whether smart watches, smart locomotives and jet engines, RFID-driven logistics, the emerging world of beacons, and more.
The Big Switch
There seems to be an inevitability to cloud computing and all that it entails, even if The Big Switch envisioned by Nicolas Carr (wherein computing resources are delivered like water or electricity) remains decades away.
By saying “inevitability,” maybe I’m following some sort of anthropic principle, ie, cloud computing is my world so I think everything should be part of it. But the idea of utilizing our IT hardware beyond today’s norm of 10-15% is relentlessly compelling to me.
A small team and I have been conducting research for the past three years about the use of IT on a national scale and its link to societal and economic development. We’ve found that we humans simply must develop vastly more effective uses of energy if the developing world has a chance of delivering significantly better lives for its citizens. This imperative crosses all industries, including energy, transportation, healthcare, government, and information technology.
So I don’t feel like I’m part of a fringe party. I feel as if cloud computing is solidly in the mainstream. I take the 5% cloud number to represent a glass 1/20th full. Now it’s time to get working on the other 95%.
By Roger Strukhoff