Public cloud will account for more than half of enterprise IT spending by 2025

Public cloud computing will surpass traditional IT investments in 2025, among addressable market segments, according to new research from Gartner.

The 'cloud shift' analysis by Gartner focuses exclusively on enterprise IT categories that are a good fit for the cloud, specifically within the application software, infrastructure software, business process services, and system infrastructure markets.

In each of these market segments, public cloud solutions will account for 51% of IT spending by 2025, up from 41% in 2022. Approximately two-thirds (65.9%) of application software expenditures in 2025 will be cloud-based, compared to 57.7% in 2022.

“The shift to the cloud has only accelerated over the past two years due to COVID-19, as organizations responded to a new business and social dynamic,” said Michael Warrilow, research vice president at Gartner.

“Technology and service providers that fail to adapt to the pace of cloud shift face increasing risk of becoming obsolete or, at best, being relegated to low-growth markets.”

In addition, Gartner predicts that traditional IT will grow at a slower rate than cloud, despite accounting for 58.7% of the addressable market in 2022.

Increasing demand for integration capabilities, agile work processes, and composable architectures will continue to boost cloud computing's market share in 2022.

Enterprise IT spending is expected to rise to almost $1.8 trillion by 2025 as cloud computing takes hold. New technologies, including distributed clouds, will further disrupt IT markets.

Gartner recommends technology and services providers target segments where cloud adoption is most rapid, as well as exploring new high-growth cloud opportunities. Infrastructure-related segments, for example, have a lower cloud penetration rate and are expected to grow faster than segments like enterprise applications, which have a higher penetration rate.