Q2 Cloud Market Sees 29% Growth as Businesses Continue SaaS Spending

Synergy Research Group has released a report on the global cloud spending for Q2. The report revealed that Q2 enterprise spending on cloud infrastructure services reached almost $55 billion. This amount represented a 29% growth compared to the previous year. Also, the report cited that the growth would have been six percentage points higher if it weren’t for volatile exchange rates and a much strengthened US dollar.

The results of the report show that cloud providers are not immune to the bigger events impacting macroeconomics. But the growth is still evidence of the continuous adoption of cloud services. This move to the cloud will also accelerate other services related to it. For example, experts predict strong initiatives to develop and launch new hyperscale data centers. They also predict higher spending on software and hardware that make up data centers. The market will see continued strong growth in all key cloud market metrics.

Not surprisingly, the report confirmed that major cloud providers Amazon, Google, and Microsoft still reigned in the global cloud market. The three combined made up 65% of the market in the second quarter. This was up from 61% the past year.

Moreover, the three major providers dominated the public cloud market with 72% of the share in Q2. Public PaaS and IaaS services made up the largest share and grew by 31% in the period studied. Meanwhile, quarterly revenue from cloud infrastructure services stood at $54.7 billion. This number comes with a trailing 12-month revenue reaching $205 billion. Cloud infrastructure includes IaaS, PaaS, and hosted private cloud services. 

When it comes to all other cloud providers, the report found that their aggregated revenues increased by more than 150% since the beginning of 2018. However, their collective market share has gone down from 49% to 35%, indicating a slow growth rate compared to market leaders.

Where Is SaaS in Global Cloud Spending?

SaaS falls in public cloud spending. Market analysts expect SaaS end-user spending to reach $176.6 billion in 2022. Another study found that 42% of businesses are transitioning their on-premise software to SaaS. Other cloud computing statistics also point to SaaS as having the largest share of cloud workloads and spending. This is mainly due to businesses prioritizing SaaS solutions that help them improve their operations.

North America is still the top regional market for SaaS. In 2020, it accounted for 57.5% of the global market. Even with a looming recession, businesses usually hold on to their software subscriptions. For instance, a recent study by the IDC showed that most APAC enterprises have cut IT spending as they anticipate an economic slowdown. However, SaaS was still one of the items included in the priority list for IT spending. In a time of recession, companies will delay investments in new projects and spend only on essential services or technology to maintain business-critical operations.

But this is not to say that SaaS vendors should be complacent. Historically, SaaS has shown a certain degree of resilience against recessions but every era is different. There are several things that SaaS companies can do in a recession. These essentially involve a balancing act of catering to customers’ budgets and implementing strategies that can increase the company’s revenue. Though the tech market overall is declining, vendors can find some assurance that SaaS is safe in the short term.