COVID-19 Boosts Cloud Service Spending by $1.5 Billion in the Third Quarter

New data from Synergy Research Group shows that enterprise spending on cloud services got a big boost in the third quarter, as COVID-19 drove changes in enterprise behavior and sped up the transition from on-premise operations to cloud-based services. IaaS, PaaS and SaaS are all now massive markets that are still growing rapidly, but their scale has inevitably caused growth rates to erode steadily. However, in Q3 all three of these cloud services saw their growth rates bounce back noticeably, adding some three percentage points of growth to what would have been expected under normal circumstances. Every quarter the major cloud providers are benefiting from substantially increased enterprise spending on their services; in Q3 that spending increase got an added boost of around $1.5 billion.

Enterprise spending on cloud infrastructure services (IaaS, PaaS and hosted private cloud services) and SaaS reached $65 billion in the third quarter, up 28% from the third quarter of 2019. PaaS continues to have the highest growth rate, reaching 37% in Q3, but growth is strong across a broad range of cloud segments and all geographic regions.

“At Synergy we track cloud market numbers very closely and we knew there would be strong growth in Q3, but the actual growth was higher than we’d expected. There is no doubt that COVID-19 was the main reason for that boost,” said John Dinsdale, a Chief Analyst at Synergy Research Group. “Workloads are being shifted to public clouds even more quickly than anticipated and hosted software apps are especially attractive for enterprises navigating their way through a worldwide pandemic. Rapid adoption is also being helped by a plethora of hybrid cloud services which are helping to smooth the path towards greater usage of public clouds. Whatever a post-pandemic world may look like, we don’t expect those trends to reverse.”