Reporting that spending on cloud services --- public cloud services specifically --- is on the rise may not surprise anyone, but the rate of growth expected this year may catch your attention.

Gartner today announced that it predicts worldwide end-user year-over-year spending to grow a whopping 21.7% in 2023. Spending will come in at $597.3 billion this year, versus $491 billion last year.

According to Gartner, the growth is expected because cloud services are driving digital business thanks to emerging technologies such as generative artificial intelligence (AI), Web3 and metaverse. Not surprisingly, the growth is expected to continue in 2024 (see chart below). The emergence of multicloud is also expected to drive spending on platforms and managed services.

Hyperscalers (e.g,. Google Cloud, Microsoft Azure and Amazon Web Services) are driving much of the growth thanks to the rise of generative AI. Fueled by large language models (LLMs) generative AI needs “powerful and scalable computing capabilities to process data in real-time,” according to Sid Nag, VP and analyst at Gartner. “Cloud offers the perfect solution and platform. It is no coincidence that the key players in the generative AI race are cloud hyperscalers,” Nag said in the report.

Gartner predicts that all segments of the cloud market will see growth in 2023. However, the biggest growth will come in the infrastructure-as-a-service (IaaS) segment, which will increase by 30.9%. The next biggest area for growth is platform-as-a-service (PaaS), which is expected to grow at 24.1%. Those big jumps in spending are due to emerging technologies like “chatbots and digital twins, which are reliant on cloud infrastructure and platform services to meet growing demands for compute and storage power,” Nag said.

Infrastructure and platform service account for the biggest growth, but software as a service (SaaS) maintains the top spot for total end-user spending. SaaS spending is projected to grow 17.9% to total $197 billion in 2023.

[caption id="attachment_128806" align="alignnone" width="883"] Worldwide public cloud spending forecast (millions of U.S. Dollars). Source: Gartner[/caption]

While not broken out separately, Nag told SDxCentral that multicloud platform and services spending accounts for part of the growth Gartner forecasts. Nag said that currently 76% of organizations have a workload running on multiple clouds. “It’s not every workload,” he said, but they tend to be mission-critical workloads. For example, he said, you might have Amazon Web Services as your primary cloud provider but use Microsoft Azure for an application like Power BI and Google Cloud for AI.

To get the single pane of glass view of your cloud ecosystem, Nag said, multicloud managed services (MCMS) providers offer aggregation, integration, customization and governance -- providing the tools and expertise to manage multiple cloud environments.

Nag uses the analogy of a handyman. “If my refrigerator breaks, I call a handyman and he brings a toolbox with multiple tools. He fixes the refrigerator with four tools. Then, two months later, my dishwasher breaks. The same guy shows up with the same toolbox and uses five tools. Of those, three were common to the prior trip. The platform is the toolbox, but the real intelligence is the brain of that handyman, who's a service provider.”

Nag said that while it's important to recognize the need for multicloud platforms, it is more important to understand  the services layer provided by the managed services provides (MSPs) and the global system integrators (GSIs) such as Cognizant Accenture, Kyndryl and others.