Even as enterprises attempt to tackle economic headwinds with budget cutbacks, a research report from market research firm Gartner showed that end-user public cloud spending is expected to grow in 2023.

The report, which covers categories such as infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS) and software-as-a-service (SaaS) among other cloud services, showed that public cloud spending is slated to reach a total of $591.80 billion in 2023, a 20.7% increase from $490.30 billion in 2022.

The 20.7% growth in spending is higher than the 18.8% growth recorded in 2022.  

“Current inflationary pressures and macroeconomic conditions are having a push and pull effect on cloud spending. Cloud computing will continue to be a bastion of safety and innovation, supporting growth during uncertain times due to its agile, elastic and scalable nature,” said Sid Nag, a vice president and analyst at Gartner.

Infrastructure-as-a-service to outpace other services in growth

Out of all the public cloud services, IaaS is expected to see the highest growth in 2023 with spending expected to reach $150.25 billion, an increase of 29.8% from $115.74 billion in 2022.

The reason for the growth, according to Gartner, is continued migration of enterprises to the cloud.

“IaaS will naturally continue to grow as businesses accelerate IT modernization initiatives to minimize risk and optimize costs,” Nag said, adding that moving operations to the cloud also reduces capital expenditures by extending cash outlays over a subscription term.

This benefit will play a vital role during times of economic uncertainty as cash will be critical to maintaining operations for an enterprise, the analyst said.

PaaS and SaaS to grow despite challenges

SaaS is expected to grow but might see the most impact from an economic downturn due to staffing challenges and enterprises’ focus on margin protection because of inflation, according to Gartner.

“Higher-wage and more skilled staff are required to develop modern SaaS applications, so organizations will be challenged as hiring is reduced to control costs,” said Nag.

SaaS spending is expected to reach $195.20 billion in 2023, an increase of 16.8% from $167.10 billion in 2022. SaaS spending in 2021 was estimated at $146.32 billion.

Explaining the continued growth in SaaS services, Nag said that cloud spending will grow due to its “perpetual” usage.

“Once applications and workloads move to the cloud they generally stay there, and subscription models ensure that spending will continue through the term of the contract and most likely well beyond,” Nag said.

PaaS spending is expected to grow by 23.2% to reach $136.40 billion in 2023 compared to $110.67 billion in 2022.

The growth in PaaS services can be attributed to its ability to facilitate more efficient and automated code generation for SaaS applications, according to the market research firm.

However, despite the generally upbeat outlook, Gartner cautioned that if enterprises end up deciding to make large budget cuts, cloud spending could be affected since it forms the biggest chunk of any IT budget.

“Cloud spending could decrease if overall IT budgets shrink, given that cloud continues to be the largest chunk of IT spend and proportionate budget growth,” said Nag.

Other public cloud services such as security capabilities, business process services (BPaaS), and desktop-as-a-service (DaaS) are all expected to grow in 2023, the report showed.

Budgeting, Cloud Computing

Driven by the ongoing need for companies to automate repetitive tasks, global RPA (robotic process automation) software revenue is expected to reach $2.9 billion in 2022, up by 19.5% from last year, according to a market research report by Gartner.

North America will account for the largest revenue share at 48.5%, followed by Western Europe and Japan at 19% and 10% respectively, Gartner said.

“Organizations will look to increase their spending on RPA software solutions because they still have a lot of repetitive, manual work that through automation could free up employees’ time to focus on more strategic work,” said Varsha Mehta, a senior market research specialist at Gartner.

The demand is also breeding competition among RPA software vendors who, according to Mehta, are pushing beyond a traditional single technology-focused offering to a more advanced suite of tools that encompasses technology including  low-code application development platforms, process and task mining, decision modelling, iPaaS (integration platform as a service), computer vision, and identity management capabilities on top of their existing RPA offering.

RPA embraces tech that will lead to hyperautomation

This phenomenon will enable vendors to offer hyperautomation-enabling technology in the future, Mehta said. Hyperautomation, as defined by Gartner, involves the use of multiple technologies that companies can use use to rapidly identify, vet and automate as many business and IT processes as possible.

However, even though RPA revenue will continue to increase, growth will slow down, Gartner says. RPA software revenue grew at 31% year over year during 2021, higher than the projected growth of 19.5% this year, and next year the market research firm expects that growth will further slow, to 17.5%, reaching $3.5 billion.

This is because other technology improvements—such as modernization of integration strategy, distributed cloud storage, and spending on cloud-native applications—to achieve business architecture composability is taking precedence over automation or process efficiency demands, the company said. Composable architecture treats IT resources as services that can be made available on an as-needed basis, depending on the needs of different applications and users.

“Slow implementation across one or multiple business functions slows down the ROI cycle—one of the causes of slow spending on RPA,” Mehta added. He said that one reason for slow deployment is that RPA projects are usually focused on a particular process or initiative, which then pose scalability issues for tailoring  RPA bots to varying organizational or business function needs.

Enterprise Applications, Robotic Process Automation