Australia’s cloud computing services market will nearly quadruple over five years to $4.55 billion in 2018, Frost & Sullivan is forecasting.

The ‘State of Cloud Computing in Australia Report 2014’ found that the Australian cloud computing market in 2013 was generating revenues of $1.23 billion. This includes software-as-a-service (SaaS), infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS).

The report is based on a study of 603 decision-makers on IT services and infrastructure or data centre spending whose organisations are using some form of cloud-based solutions.

The report predicts continued growth through 2014 as the market has emerged from the early adopter stage to an early growth stage of adoption by the wider market.

The growth will continue at a more modest pace when the market reaches a higher state of maturity.

IaaS and PaaS are predicted to grow faster from their lower bases than SaaS, which is currently the most used form of cloud computing.

Benefits of cloud computing

Organisations in the study reported saving an average of 12% through adoption of cloud computing services.

More organisations are taking on data-intensive applications that require back-end cloud applications to store and analyse data.

This requires outsourcing, which has additional cost-saving benefits and is shrinking IT departments in size and number.

Aside from cost-savings, benefits of cloud computing include:

• Enabling easier access to IT resources from any location,

• providing faster access to data for applications such as data analytics, and

• freeing up resources to use for other tasks.

Strong adopters of cloud services over the past six to 12 months have included organisations from the education, mining, government and financial services sectors.
Retail and manufacturing organisations are adopting cloud-based business management applications.

Frost & Sullivan Australia and New Zealand senior research manager Phil Harpur says:

“Two-thirds of companies that have adopted cloud services believe it has significantly improved their overall business performance. A significant proportion of organisations feel it has enhanced their ability to innovate and explore new business models.”

Cloud computing adoption hesitations

The Frost & Sullivan report found 38% of organisations are more concerned about IT security since adopting cloud computing.

Security concerns was the main challenge stopping many companies from moving to cloud services, and they are also worried about:

• Relinquishing control over key business processes and data,

• risks around disaster recovery, and

• the reliability of back-up services.

The report says that cloud service providers currently have not fully addressed concerns regarding disaster recovery and back-up services.

“Few cloud providers currently provide comprehensive security features built into their services, so companies must implement appropriate security policies to address these issues,” Harpur says.

“The dynamic nature of the cloud environment makes it more vulnerable to security threats and IT security requirements increase in complexity.”