Cloud Solutions Market Growth

Part
01
of two
Part
01

Cloud Solutions Market Growth

Approximately 13,505 organizations in the US have at least one application in the cloud with the annual spending by the organizations on cloud solutions projected to hit US$135.78 billion by the end of the year. The cloud computing industry is projected to experience an annual growth rate of 16% resulting in approximately 24,453 organizations in the US that will be using cloud solutions at an estimated annual spending of $275.13 billion by 2023.

Research methodology

We commenced the research to determine the growth rate of the adoption rate of cloud solutions by US companies and the percentage of US companies that will adopt the use of cloud solutions in the near future by defining the "current and near future". We defined the "current" to include 2019 and 2020 and bracketed the years 2021 to 2023 as "the near future". Then we embarked on scouring through press releases and news updates from credible sources such as PR News Wire, Forbes, and USA Today to find out if they had published any relevant data regarding the adoption rate of cloud solutions by US companies. We also scanned through industry surveys conducted by authoritative companies such as Infocluth and Market Research Media. Unfortunately, we were not able to identify any relevant data from these sources. However, we were able to find information regarding the subject under investigation locked behind paywalls on Infocluth and Market Research Media. The limited sample information that was available publicly on these databases detailed the statistics of businesses that use cloud computing applications. Sample data from the paywalled report by Infocluth included some companies that are using cloud services such as Fox News, United Airlines, and Xerox Corporation.

Next, we decided to establish a proxy for businesses that are currently using cloud solutions in the US with the intention of using the proxy to calculate the growth rate of the adoption rate of cloud solutions by US companies and the percentage of US companies that will adopt the use of cloud solutions in the near future. This strategy proved worthwhile as we were able to obtain a survey report published by DNG Communications detailing a breakdown of the percentage of businesses that are currently using cloud solutions in the US.

According to the survey 73% of organizations in the US have at least one application in the cloud. Additionally, the US Census Bureau indicates that there are 18,500 businesses across the US that have more than 500 employees. Assuming that these businesses would readily represent companies interested in the cloud market, we can calculate the number of businesses in the US that use cloud solutions

CALCULATIONS
73% * 18500=13,505

Therefore, 13,505 organizations in the US have at least one application in the cloud.

According to an Article published by Forbes, Wibikon predicts that cloud computing will experience an annual growth rate of 16% between 2016 to 2026. Therefore, we can use the data to calculate the number of organizations that will be using cloud solutions in the near future (2023) at a growth rate of 16% for the next 4 years to be approximately 24,453 businesses.

Additionally, we were able to find relevant data detailing the spending of companies in the US on cloud solutions. According to a report from Get The Deal Through, the spending by US businesses on cloud solutions is expected to increase from US$67 billion in 2015 to US$162 billion in 2020. We used the CAGR calculator to calculate that the current spending by US businesses to be US$135.78 billion in 2019.

CALCULATIONS
Starting Value US$67 billion
Ending Value US$162 billion
Number of periods 2020 - 2015 = 5 years

Using the CAGR calculator we were able to establish that the compound annual growth rate (CAGR) for the annual spending by companies on cloud solutions to be 19.31%.

Assuming that the market will continue growing at this rate, we were able to calculate the annual spending by US organization on cloud computing from 2015 to 2025:

2016 US$79.94 billion (calculated 67 x 19.31%=79.94)
2017 US$95.38 billion (calculated 79.94 x 19.31%= 95.38)
2018 US$113.8 billion (calculated 95.38 x 19.31%=113.8)
2019 US$135.78 billion (calculated 113.8 x 19.31%=135.78)
2020 US$162.0 billion (calculated 135.78 x 19.31%=162)
2021 US$193.28 billion (calculated 162 x 19.31%=193.28)
2022 US$230.6 billion (calculated 193.28 x 19.31%=230.6)
2023 US$275.13 billion (calculated 230.6 x 19.31%=275.13)

THE CURRENT AND NEAR FUTURE CLOUD SOLUTIONS MARKET

According to a survey report published by IDG Communications on 550 organizations in the US, 73% of the organizations reported that they had at least one application relying on cloud solutions. The US Census Bureau has established that there are at least 18,500 businesses across the US that have more than 500 employees. We used the figures to calculate the number of US companies that use cloud solutions services in 2019 as approximately 13,505.

Additionally, a report from Get The Deal Through indicated that the spending by US businesses on cloud solutions is expected to increase from US$67 billion in 2015 to US$162 billion in 2020. We used these figures to estimate the current (2019) spending by US businesses on cloud solutions as US$135.78 billion with the amount projected to increase to $275.13 by 2023.

GROWTH RATE AND CHANGE FOR THE FUTURE

The cloud computing industry is projected to experience an annual growth rate of 16%. Using, this percentage annual growth rate, we were able to determine that by 2024, approximately 24,453 organization in the US will be using cloud solutions in their operations. Additionally, the US federal government is expected to exceed US$10 billion in spending for cloud computing by 2023. Assuming that the current growth rate of the annual spending on the cloud market of 19.31% remains constant over the projected period, by 2023 the annual spending on public cloud solutions is projected to hit US$275.13 billion.

Part
02
of two
Part
02

Microsoft Office 365

Microsoft's Office 365 has a 41.61% market share of all the office suite technologies used by US companies in January 2019. The adoption rate of Office 365 has grown from 14.27% to 23.43% from 2016 to 2018. It is expected to reach 24.97% by 2022. Below is a methodology of how we calculated the figures presented in the research.

METHODOLOGY

We started the research by looking for information on the current and projected growth rate of Microsoft Office 365. Some of the sources we looked at include the Microsoft Annual Report, the Microsoft website, Zdne, Cloud Blogs, Systools Group, Skyhigh Networks, Insight, Statista, and iData Labs. Based on these sources, we were able to identify the global adoption rate with US SMB data. As such, we found the market share of Microsoft Office 365 and used this data to triangulate the current and projected adoption rate among US companies.

Calculations:

CURRENT ADOPTION RATE OF MICROSOFT OFFICE 365:

Microsoft Office 365 usage grew from 34.3% to 56.3%) from 2016-2018 as per the Cloud Adoption 2018 War report by Bitglass.

Therefore, GROWTH RATE OF THE ADOPTION RATE OF MICROSOFT OFFICE 365 for US COMPANIES = Global growth rate * US market share=
For 2016= 34.3%*41.61% =14.27%
For 2018 = 56.3%*41.61%= 23.43%

GROWTH RATE OF THE ADOPTION RATE OF MICROSOFT OFFICE 365:

According to Gartner, cloud-based office suites will be used by 33% of US companies by 2017 and by 2022 this will increase to 60%.

Therefore projected growth rate = GROWTH RATE OF THE ADOPTION RATE OF MICROSOFT OFFICE 365 for US COMPANIES = Global growth rate * US market share=
For 2017 = 33%*41.61% =13.73%
For 2022= 60%*41.61% = 24.97

THE GROWTH RATE OF THE ADOPTION RATE OF MICROSOFT OFFICE 365 BY US COMPANIES

USE OF MICROSOFT OFFICE 365 BY US COMPANIES

  • Office 365 is the most used office suite application by companies in the US with a market share of 41.61% by 2019

CURRENT ADOPTION RATE

  • Between 2016 and 2018, the usage of Office 365 grew from 14.27% to 23.43%.
  • The adoption rate is double in businesses with more than ten employees compared to those with fewer employees.
  • Between 2016 and 2017, 70% of Fortune 500 companies bought Office 365.

GROWTH RATE

13.73% of businesses in US were expected to adopt cloud-based office suites by 2017 and 24.97% by 2022.

NUMBER OF US COMPANIES CURRENTLY ADOPTING THE USE OF MICROSOFT OFFICE 365

Currently approximately 554,945 companies in the US use Microsoft Office 365.

ESTIMATED PERCENTAGE OF US COMPANIES ADOPTING THE USE OF MICROSOFT OFFICE 365 IN FUTURE

According to the Microsoft team, the company expects to have 66.67% of its Office business customers in the cloud by fiscal 2019.

HOW THIS GROWTH RATE MAY CHANGE IN THE FUTURE

According to Vanson Bourne, there has been a 20.7% increase in companies using cloud services while employee productivity increased by 18.8% and IT spending decreased by 15.1%. These firms also experienced a 19.6% increase in revenue, which indicates that use of IT applications increases their competitive advantage.

A report by Constellation Research also stated that the artificial intelligence market will exceed $100 billion by 2025. This will lead to the adoption of new digital models that use AI such as Dynamics 365, which is the next generation of intelligent business applications by Microsoft.

According to Persistence Market Research, Office 365 is also incorporating the Microsoft Teams Communication Software that will facilitate company communication requirements. This will enable the swift transition from messages to voice calls. The market for such video communication Platform as a Service (PaaS) market across the world with an annual growth rate of 39.2% between 2016 and 2024.

ADDITIONAL FINDINGS

The adoption rate of Office 365 varies based on the type of industry:
  • In the finance sector whereby Skype for Business and OneDrive for Business are the most used applications with 17.3% and 39.3% market shares respectively.
  • In the media and manufacturing industries, the most commonly used application is Exchange Online.
  • Within the healthcare sector, Skype for Business has a 14.2% share, which exceeds all Office 365 applications.

Based on the War report by Bitglass, between 2016 and 2018, the usage of Office 365 grew from 34.3% to 56.3%. According to Gartner, cloud-based office suites will be adopted by 33% of all businesses by 2017 and 60% by 2022.

Sources
Sources