Worldwide spending on public IT cloud services will be more than $40 billion in 2012 and is expected to approach $100 billion in 2016, according to a new forecast from International Data Corporation (IDC). Over the 2012–2016 forecast period, public IT cloud services will enjoy a compound annual growth rate (CAGR) of 26.4 percent, five times that of the IT industry overall, as companies accelerate their shift to the cloud services model for IT consumption.

"The IT industry is in the midst of an important transformative period as companies invest in the technologies that will drive growth and innovation over the next two to three decades," said Frank Gens, senior vice president and chief analyst at IDC. "By the end of the decade, IDC expects at least 80 percent of the industry's growth, and enterprises' highest-value leverage of IT, will be driven by cloud services and the other 3rd Platform technologies."

By 2016, public IT cloud services will account for 16 percent of IT revenue in five key technology categories: applications, system infrastructure software, Platform-a-a-Service (PaaS), servers, and basic storage. More significantly, cloud services will generate 41 percent of all growth in these categories by 2016. "Quite simply, vendor failure in cloud services will mean stagnation," Gens added.

Software-as-a-Service (SaaS), which is the combination of applications as a service and system infrastructure software as a service, will claim the largest share of public IT cloud services spending over the next five years. But other categories, notably basic storage and platform as a service, will show faster growth. Accelerating PaaS rollouts over the next 12-18 months will be critical to maintaining strong cloud momentum.

Geographically, the United States will remain the largest public cloud services market, followed by Western Europe and Asia/Pacific (excluding Japan). But the fastest growth in public IT services spending will be in the emerging markets, which will see its collective share nearly double by 2016 when it will account for almost 30 percent of net-new public IT cloud services spending growth.