Australia’s public cloud spending to hit A$23bn in 2024

Public cloud spending in Australia is expected to reach A$23.2bn in 2024, up 19.3% from 2023, according to the latest market forecast from Gartner.

All segments of Australia’s public cloud market are expected to see growth, with infrastructure as a service (IaaS) set to experience the highest growth at 24.6%, followed by platform as a service (PaaS) at 22.7%.

Michael Warrilow, Gartner’s Sydney-based research vice-president, said spending on public cloud services in Australia will reach 50% of the total addressable market for the first time in 2024, thanks to higher adoption of IaaS and PaaS and the infrastructure required to support the rapid uptake of artificial intelligence (AI).

“However, most Australian organisations remain immature in how they manage the cost of cloud. In 2024, CFOs [chief financial officers] are going to put much greater scrutiny on continuing rapid growth in cloud spend,” he added.

Globally, spending on public cloud services is set to grow 20.4% to total $678.8bn in 2024, up from US$563.6bn in 2023.

“Cloud has become essentially indispensable,” said Sid Nag, vice-president analyst at Gartner. “However, that doesn’t mean cloud innovation can stop or even slow. The tables are turning for cloud providers as cloud models no longer drive business outcomes, but rather, business outcomes shape cloud models.”

“For example, organisations deploying generative AI [GenAI] services will look to the public cloud, given the scale of the infrastructure required,” said Nag. “However, to deploy GenAI effectively, these organisations will require cloud providers to address non-technical issues related to cost, economics, sovereignty, privacy and sustainability. Hyperscalers that support these needs will be able to capture a brand-new revenue opportunity as GenAI adoption grows.”

Another key trend driving cloud spending is the continued rise of industry cloud platforms that combine software-as-a-service (SaaS), PaaS and IaaS services into a whole-product offering with composable capabilities.

Gartner predicts that by 2027, over 70% of enterprises will use industry cloud platforms to accelerate their business initiatives, up from less than 15% in 2023.

“GenAI adoption will also support the growth in industry cloud platforms,” said Nag. “GenAI models that are applicable across diverse industry verticals might require significant customisation, affecting scalability and cost-effectiveness. 

“Public cloud providers can position themselves as partners in the responsible and tailored adoption of GenAI by building on the same approaches applied to industry clouds, sovereign clouds and distributed clouds,” he added.

Global hyperscalers Amazon Web Services, Google Cloud and Microsoft have been doubling down on GenAI by providing access to large language models, optimising their infrastructure to support GenAI workloads, baking GenAI capabilities into various SaaS applications and offering development with tools for building GenAI applications.