The cloud tech IPO landscape may have struggled a little of late, but the analysts at EY – formerly Ernst & Young – argue that on a global scale, 2016 saw an all-time record high in overall technology activity due to the “massive digital transformation” caused by disruptive technologies.

The overall aggregate 2016 value of $466.6 billion (£373bn) was up 2% over 2015’s previous record, while the Q416 figure of $117.2bn was down 38% year over year.

For the full year of 2016, the consultancy put together a graph of number of deals in the sector compared with average value of deal. As expected from a more mature market, cloud and software as a service (SaaS) was miles ahead in terms of volume – between 1,200 and 1,400 – but paled in monetary terms compared to connected car and Internet of Things (IoT) technologies.

The report coins the term ‘background radiation’ when describing cloud deals, adding that the IoT and artificial intelligence (AI) will continue to fuel high tech-targeted M&A in 2017.

In terms of specific regions, cloud and SaaS was a factor in more than a quarter (28%) of EMEA deals in Q416, compared with the Americas where it factored into almost 950 deals.

The standout, as the report affirms, was the Oracle-NetSuite acquisition for $9.3bn, announced in July but only completed in November. Microsoft’s $26.2bn outlay for LinkedIn was described by EY as a reflection of “the way social networking is transforming business, the rising role of big data and the potential for both those technologies to transform Microsoft products.” Equinix’s $3.6bn move to snaffle 29 data centres from Verizon in December was also noted.

Earlier this month, the yearly analysis issued by Byron Deeter, partner at Bessemer Venture Partners (BVP), came to a pretty similar conclusion. While IPOs ran comparatively dry in the cloud space, with Twilio the star performer, companies acquired in the public cloud space represented 40% of the $300bn market cap. The top 100 private cloud companies, as noted by Forbes in September, also represented more than $100bn of private enterprise value alone.

First IDC made its forecast on the public cloud, and now Gartner has done likewise, predicting that public cloud services market will grow 18% in 2017 to total $246.8 billion (£198.1bn).

IDC’, by comparison, said global spending on public cloud services and infrastructure would reach $122.5bn by the end of this year with seven out of eight primary geographic regions to record CAGRs of more than 20% in the next five years.

Outside of ‘cloud advertising’ – “cloud-based services that support the selection, transaction and delivery of advertising and ad-related data”, according to the analysts – the largest market in 2017 will be software as a service (SaaS), in line with IDC’s predictions. SaaS will overtake BPaaS, cloud business process services this year, while infrastructure as a service (IaaS) will grow to $34bn this year.

By 2020, SaaS will be at $75.7bn, IaaS at $71.5bn, and PaaS at $56.1bn, comprising a total market of $383.3bn, Gartner adds. Growth in the infrastructure compute service space will be enhanced by artificial intelligence (AI), analytics and the Internet of Things (IoT), while the growth of PaaS will also drive the growth of IaaS.

Again, as IDC mentioned, North America is the primary market; more than half of application adoption in the continent will be SaaS or otherwise cloud-related. Gartner also focused on China at a national level, whose forecast was increased to account for anticipated higher buyer demand, saying that ‘while it was nascent and several years behind the US and European markets, it is expected to maintain high levels of growth as digital transformation becomes more mainstream over the next five years.’

“Organisations are pursuing strategies because of the multidimensional value of cloud services, including values such as agility, scalability, cost benefits, innovation and business growth,” said Sid Nag, Gartner research director. “While all external-sourcing decisions will not result in a virtually automatic move to the cloud, buyers are looking to the ‘cloud first’ in their decisions, in support of time to value impact via speed of implementation.”

You can find out more here.

First IDC made its forecast on the public cloud, and now Gartner has done likewise, predicting that public cloud services market will grow 18% in 2017 to total $246.8 billion (£198.1bn).

IDC’, by comparison, said global spending on public cloud services and infrastructure would reach $122.5bn by the end of this year with seven out of eight primary geographic regions to record CAGRs of more than 20% in the next five years.

Outside of ‘cloud advertising’ – “cloud-based services that support the selection, transaction and delivery of advertising and ad-related data”, according to the analysts – the largest market in 2017 will be software as a service (SaaS), in line with IDC’s predictions. SaaS will overtake BPaaS, cloud business process services this year, while infrastructure as a service (IaaS) will grow to $34bn this year.

By 2020, SaaS will be at $75.7bn, IaaS at $71.5bn, and PaaS at $56.1bn, comprising a total market of $383.3bn, Gartner adds. Growth in the infrastructure compute service space will be enhanced by artificial intelligence (AI), analytics and the Internet of Things (IoT), while the growth of PaaS will also drive the growth of IaaS.

Again, as IDC mentioned, North America is the primary market; more than half of application adoption in the continent will be SaaS or otherwise cloud-related. Gartner also focused on China at a national level, whose forecast was increased to account for anticipated higher buyer demand, saying that ‘while it was nascent and several years behind the US and European markets, it is expected to maintain high levels of growth as digital transformation becomes more mainstream over the next five years.’

“Organisations are pursuing strategies because of the multidimensional value of cloud services, including values such as agility, scalability, cost benefits, innovation and business growth,” said Sid Nag, Gartner research director. “While all external-sourcing decisions will not result in a virtually automatic move to the cloud, buyers are looking to the ‘cloud first’ in their decisions, in support of time to value impact via speed of implementation.”

You can find out more here.

Want to find out more about how artificial intelligence (AI) can affect your business? The AI Expo world series brings together brands, evangelists and start-ups to explore leading developments in the enterprise and consumer sectors. Find out more here.

(c)iStock.com/HYWARDS

Global spending on public cloud services and infrastructure will hit $122.5 billion by the end of this year at an increase of almost 25% on 2016, according to the latest note from IDC.

The analyst house argues that discrete manufacturing, professional services, and banking are the primary public cloud service industries based on market share today, while professional services (23.9% compound annual growth rate), retail (22.8%) and media (22.5%) are expected to be the fastest growers. Almost half of all public cloud spending will come from businesses with more than 1,000 employees.

The United States will remain the largest market for public cloud services generating more than 60% of revenue through the forecast period, IDC argues. Yet seven out of eight regions are expected to reach CAGRs of more than 20% over the next five years – with the US lagging behind at a mere 19.9% CAGR.

“European companies have been slower in the adoption of cloud when compared to their US counterparts, but now the market is maturing and it is the right time for cloud providers to target and capture the untapped segments,” said Serena Da Rold, IDC senior research manager for customer insights and analysis.

This missive makes sense when examining the various moves providers have made in the continent over recent months. Last month reports said that Facebook was expanding its data centre empire with a new site in Denmark, while Rackspace moved operations to Germany in November last year and IBM became the latest vendor to build a UK site at the same time.

Software as a service will remain dominant albeit slowing down over time – two thirds of all public cloud spending in 2017, moving to 60% by 2020 – yet the figures also need to be tempered with some lateral thinking, IDC argues.

“As cloud adoption expands over the next four years, what clouds are and what they can do will evolve dramatically – in several important ways,” said Frank Gens, senior vice president and chief analyst at IDC. “The cloud will become more distributed – through Internet of Things edge services and multicloud services – more trusted, more intelligent, more industry and workload specialised, and more channel mediated.

“As the cloud evolves these important new capabilities – what IDC calls ‘Cloud 2.0’ – the use cases for the cloud will dramatically expand,” Gens added.

According to a note from Synergy Research published at the beginning of this month, quarterly public cloud infrastructure service revenues – including public infrastructure as a service and platform as a service – have hit more than $7 billion, continuing to grow at almost 50% per year.

(c)iStock.com/HYWARDS

Global spending on public cloud services and infrastructure will hit $122.5 billion by the end of this year at an increase of almost 25% on 2016, according to the latest note from IDC.

The analyst house argues that discrete manufacturing, professional services, and banking are the primary public cloud service industries based on market share today, while professional services (23.9% compound annual growth rate), retail (22.8%) and media (22.5%) are expected to be the fastest growers. Almost half of all public cloud spending will come from businesses with more than 1,000 employees.

The United States will remain the largest market for public cloud services generating more than 60% of revenue through the forecast period, IDC argues. Yet seven out of eight regions are expected to reach CAGRs of more than 20% over the next five years – with the US lagging behind at a mere 19.9% CAGR.

“European companies have been slower in the adoption of cloud when compared to their US counterparts, but now the market is maturing and it is the right time for cloud providers to target and capture the untapped segments,” said Serena Da Rold, IDC senior research manager for customer insights and analysis.

This missive makes sense when examining the various moves providers have made in the continent over recent months. Last month reports said that Facebook was expanding its data centre empire with a new site in Denmark, while Rackspace moved operations to Germany in November last year and IBM became the latest vendor to build a UK site at the same time.

Software as a service will remain dominant albeit slowing down over time – two thirds of all public cloud spending in 2017, moving to 60% by 2020 – yet the figures also need to be tempered with some lateral thinking, IDC argues.

“As cloud adoption expands over the next four years, what clouds are and what they can do will evolve dramatically – in several important ways,” said Frank Gens, senior vice president and chief analyst at IDC. “The cloud will become more distributed – through Internet of Things edge services and multicloud services – more trusted, more intelligent, more industry and workload specialised, and more channel mediated.

“As the cloud evolves these important new capabilities – what IDC calls ‘Cloud 2.0’ – the use cases for the cloud will dramatically expand,” Gens added.

According to a note from Synergy Research published at the beginning of this month, quarterly public cloud infrastructure service revenues – including public infrastructure as a service and platform as a service – have hit more than $7 billion, continuing to grow at almost 50% per year.

(c)iStock.com/maxkabakov

Amazon, Apple and Microsoft have vowed to improve their terms and conditions of cloud storage contracts after a review from the Competition and Markets Authority (CMA), the body has announced.

The giants join BT, Dixons Carphone, Dropbox, Google, JustCloud, Livedrive and Mozy in moving forward with improved conditions. Common areas where Amazon, Apple, and Microsoft will make changes include giving ‘adequate notice’ to customers before significant changes are made to the service, or whether it is suspended or cancelled, as well as cancellation rights and refunds if customers do not want to accept ‘significant’ changes.

“We are pleased that Amazon, Apple and Microsoft have joined seven previous companies in working with the CMA and agreeing commitments to improve their terms and conditions and, as a result, millions of cloud storage users will benefit from fairer terms which will help them make the right choices when using cloud storage services,” Andrea Coscelli, CMA acting chief executive said in a statement.

In May last year, the CMA issued an open letter to cloud storage providers warning them of issues if they didn’t smarten up their customer service. “If a term is not fair it will not be legally binding on a consumer and you are at risk of enforcement action,” the letter, from project director Cecilia Parker Aranha, explained. “Having clear and fair terms will save you time, help prevent disputes and reputational damage, and protect your business if something goes wrong.”

The underlying issue which adds to the overall landscape of this announcement is the upcoming General Data Protection Regulation (GDPR). Ian Moyse, board member of the Cloud Industry Forum, and who is helping to organise training courses for businesses on GDPR, told this publication that cloud was “entering the growing up phase…this will benefit the industry as a whole, not just the consumer.”

As regular readers of this publication will know, plenty of cloud companies can disappear with little – or no – notice. 2017 kicked off with the news that developer-friendly cloud storage provider Bitcasa was ‘no more’, according to a cryptic message left on the company’s website, while customers of Nitrous.io were given two weeks to shift their data before its primary service shut down back in November.

The CMA added that as part of its compliance review, all cloud storage providers ‘co-operated and constructively engaged’ with the authority, and ‘voluntarily made changes to their terms and conditions’.

(c)iStock.com/maxkabakov

Amazon, Apple and Microsoft have vowed to improve their terms and conditions of cloud storage contracts after a review from the Competition and Markets Authority (CMA), the body has announced.

The giants join BT, Dixons Carphone, Dropbox, Google, JustCloud, Livedrive and Mozy in moving forward with improved conditions. Common areas where Amazon, Apple, and Microsoft will make changes include giving ‘adequate notice’ to customers before significant changes are made to the service, or whether it is suspended or cancelled, as well as cancellation rights and refunds if customers do not want to accept ‘significant’ changes.

“We are pleased that Amazon, Apple and Microsoft have joined seven previous companies in working with the CMA and agreeing commitments to improve their terms and conditions and, as a result, millions of cloud storage users will benefit from fairer terms which will help them make the right choices when using cloud storage services,” Andrea Coscelli, CMA acting chief executive said in a statement.

In May last year, the CMA issued an open letter to cloud storage providers warning them of issues if they didn’t smarten up their customer service. “If a term is not fair it will not be legally binding on a consumer and you are at risk of enforcement action,” the letter, from project director Cecilia Parker Aranha, explained. “Having clear and fair terms will save you time, help prevent disputes and reputational damage, and protect your business if something goes wrong.”

The underlying issue which adds to the overall landscape of this announcement is the upcoming General Data Protection Regulation (GDPR). Ian Moyse, board member of the Cloud Industry Forum, and who is helping to organise training courses for businesses on GDPR, told this publication that cloud was “entering the growing up phase…this will benefit the industry as a whole, not just the consumer.”

As regular readers of this publication will know, plenty of cloud companies can disappear with little – or no – notice. 2017 kicked off with the news that developer-friendly cloud storage provider Bitcasa was ‘no more’, according to a cryptic message left on the company’s website, while customers of Nitrous.io were given two weeks to shift their data before its primary service shut down back in November.

The CMA added that as part of its compliance review, all cloud storage providers ‘co-operated and constructively engaged’ with the authority, and ‘voluntarily made changes to their terms and conditions’.

(c)iStock.com/Nicolas McComber

It continues to gain traction whilst still being significantly behind the market leader; but what underpins this growth? A new study from NetEnrich has found that while Microsoft Azure continues to see impressive usage figures, companies have to rely on channel providers to help them make the most of their implementations.

The survey, which garnered the views of more than 80 IT professionals in large and midmarket companies, found 46% of respondents were running at least half of their IT infrastructure and workloads on Microsoft’s offering, with 62% operating a multi-cloud environment which includes Azure.

Yet the survey found it was difficult to get everything done on their own. More than two thirds (67%) of respondents said they were ‘very likely’ to enlist the services of a managed service provider (MSP) in the next year, with the primary benefits of such a move being security and backups, followed by discovery and inventory of IT resources.

The biggest perceived benefits of Azure were a reduction in total cost of ownership, on-demand availability and business continuity, according to 47% of respondents. Despite leaning on MSPs, almost two thirds (64%) said they plan to purchase tools in the coming year to help with Azure migration and management. “Microsoft Azure is clearly growing its position in the public cloud market as companies of all sizes look to modernise infrastructure, deploy new services quickly and reduce costs,” said NetEnrich senior VP Justin Crotty.

As Synergy Research reported when all the main players’ most recent figures were filed earlier this month, AWS had seen minimal change in market share between the fourth quarters of 2015 and 2016; if anything, the figures went slightly down, at around 40%. But the three nearest challengers, Microsoft, Google and IBM, saw their combined share go up 5% year on year, now to just over 20%.

(c)iStock.com/Nicolas McComber

It continues to gain traction whilst still being significantly behind the market leader; but what underpins this growth? A new study from NetEnrich has found that while Microsoft Azure continues to see impressive usage figures, companies have to rely on channel providers to help them make the most of their implementations.

The survey, which garnered the views of more than 80 IT professionals in large and midmarket companies, found 46% of respondents were running at least half of their IT infrastructure and workloads on Microsoft’s offering, with 62% operating a multi-cloud environment which includes Azure.

Yet the survey found it was difficult to get everything done on their own. More than two thirds (67%) of respondents said they were ‘very likely’ to enlist the services of a managed service provider (MSP) in the next year, with the primary benefits of such a move being security and backups, followed by discovery and inventory of IT resources.

The biggest perceived benefits of Azure were a reduction in total cost of ownership, on-demand availability and business continuity, according to 47% of respondents. Despite leaning on MSPs, almost two thirds (64%) said they plan to purchase tools in the coming year to help with Azure migration and management. “Microsoft Azure is clearly growing its position in the public cloud market as companies of all sizes look to modernise infrastructure, deploy new services quickly and reduce costs,” said NetEnrich senior VP Justin Crotty.

As Synergy Research reported when all the main players’ most recent figures were filed earlier this month, AWS had seen minimal change in market share between the fourth quarters of 2015 and 2016; if anything, the figures went slightly down, at around 40%. But the three nearest challengers, Microsoft, Google and IBM, saw their combined share go up 5% year on year, now to just over 20%.

(c)iStock.com/Serjio74

Two reports have hit this publication’s inbox around the ‘state of the cloud’ in recent days; a study from RightScale argues the market is growing at a solid clip, while the summary from Bessemer Venture Partners’ (BVP) Byron Deeter found an industry which struggled at the start of 2016 but has since roared back.

While both reports differ – RightScale focuses on the adoption and vendors, while Deeter looks almost exclusively at the financial angle – there are common threads. Here, we look at the standout takeaways from both studies:

IPOs down but M&A skyrockets

Deeter affirms a point this publication has previously been making; IPOs in the cloud space have run dry. The total figure of five – Twilio, the standout, alongside Blackline, Coupa, Apptio and Everbridge – is the lowest since the financial crisis of 2008. Yet this, compounded with the resurgence of the industry towards the end of last year, means a huge amount of merger and acquisition activity as companies jockey for position.

Companies acquired represent 40% of the $300 billion market cap, including LinkedIn, bought by Microsoft, NetSuite, bought by Oracle, and AppDynamics, acquired by Cisco just last month:

The top 100 private cloud companies, as noted by Forbes in September with Slack, Dropbox and DocuSign at the summit, represents more than $100 billion of private enterprise value alone, Deeter adds.

AWS stays flat while Microsoft builds momentum

RightScale’s report interviewed more than 1000 technology professionals, across a wide range of industries, and covered the full gamut, from vendors, to DevOps tools, to multi-cloud strategy. Regarding the IaaS race, the report found that while Amazon Web Services (AWS) usage stayed the same year over year used by 57% of respondents, Azure went up from 20% to 34%.

This is a trend which has been apparent for several months, from Microsoft edging their way ahead of the pack and clearly into second place, to the gargantuan share of Amazon slightly being eaten away. AWS posted $3.5bn in revenue for the most recent quarter, up from $3.2bn in Q3.

As Synergy Research put it in their analysis earlier this month, a few cloud providers are growing at ‘extraordinary’ rates yet AWS ‘has no intention of letting its crown slip’. According to those polled, 41% of workloads on average run in the public cloud compared to 38% in private – although this number still marginally favours private when it comes to enterprises – with overall private cloud usage falling from 77% to 72% of respondents year on year.

On another note, Workday, one of the key bellwethers in Deeter’s market cap analysis – and particularly so given LinkedIn’s acquisition – migrated over to AWS as its preferred public cloud supplier back in November.

Follow Dropbox and Slack’s lead if you want to grow

As this publication reported earlier this month, Dropbox announced it had become the fastest SaaS company to hit the $1 billion revenue run rate threshold. Unlike its contemporary Box, Dropbox is ‘not in any rush’ to go public any time soon, according to a Business Insider report. Yet a slide from BVP argues this is ‘the new growth standard’.

Looking further down the scale, BVP argues that if you want to be the best, your company needs to take no more than two years to get to $10m in annualised run rate, and five years to move to $100m. Part of this is down to the astonishing growth of Slack (below):

A report from Okta in January analysing enterprise applications described the company’s outlook as ‘nothing short of jaw-dropping’. One executive this reporter spoke with – formerly of Microsoft’s parish – said there may be an element of not using Microsoft products because of the brand heritage and thinking ‘what is another enterprise tool which isn’t based around email but around communications…oh, Slack’ about its success, although adding the company had “done extremely well [with a] useful product.”

DevOps salad days and skills gap challenges

RightScale found that 30% of enterprise respondents are today adopting DevOps throughout the whole company; a number which went up from 21% this time last year. Docker, with 35% of the vote, was the most popular tool, ahead of Chef (28%), Puppet (28%), and Kubernetes (14%).

The question of DevOps and how organisations are doing it usually leads to concerns over a lack of skills to be able to realise their implementations. Going against the grain of other recent research, fewer RightScale survey respondents in 2017 said lack of resources and expertise was their biggest challenge, down to 25% from 32%.

According to a report from Claranet earlier this month, financial services organisations are the trailblazers when it comes to DevOps, while Robert Half Technology found that almost three quarters of UK CIOs polled frequently encounter IT professionals who were not up to their needs.

You can find out more about the RightScale report here, and the BVP report here.

Main picture credits: Bessemer Venture Partners