2020 Cloud Software Musings

I recently read an informative report from an alternative paid service to which I subscribe. Some of the thoughts are presented below with the permission of the author (Beth Kindig of Beth.Technology). Some of the information my be repetitive to points made on this board, but felt that some in the community might find it interesting to hear what other are saying about the current environment for the companies many of us have invested in or have on our watch lists. Primary points made included the following:

  • Cloud Software growth is expected to exceed general IT growth, for the foreseeable future.

  • Cloud Services are currently growing 4.5 times more than the IT industry.

  • Gartner believes growth through 2022 will be 3 times more than the IT industry.

  • Cloud spending will continue to be healthy even while IT spending slows.

  • Forrester indicates tech budgets in the U.S. will slow down from 6% in '17, 5% in '19 to 4% in '20.

  • Forrester states cloud software spending will rise 10% in '19 and 8% in '20. (Seems like a slowdown to me).

  • Growth is partially related to cloud software being designed to reduce costs and increase productivity.

  • SasS adding $15B in revenue per year over the next 3 years from $94.8B in '19 to $143.7B in '22.

  • IaaS adding a total of $37.7B over the next 3 years and PaaS adding a total of $12.8B in same period.

  • Companies with more than 250 employees use an average of 124 SaaS applications

  • Companies with 1-10 employees use an average of 26 SaaS applications.

  • Growth rate of spending is expected to increase by 118% between 2017 and 2020.

  • Even as cloud spending increases, customers are likely to consolidate their cloud software applications

  • Market will continue to transition from being forgiving of negative earnings, low cash levels and high valuations to one demanding revenue growth, earnings growth and fair valuations.