Public cloud spending in Australia predicted to increase to A$22.4 billion in 2026, Microsoft research reveals

A new whitepaper from International Data Corporation (IDC) commissioned by Microsoft predicts that by 2026, public cloud adoption will generate billions of dollars in new revenue for organisations within the cloud technology ecosystem in Australia and New Zealand. That includes organisations implementing public cloud technology – that is, customers – as well as suppliers of the hardware, software and services that are necessary to enable its delivery.

The IDC Whitepaper, commissioned by Microsoft, titled Public Cloud Services Opportunities and Dividends to the Australian and New Zealand Economies, Doc #AP15023X, November 2022 finds that public cloud service adoption has risen steadily since the pandemic started, with organisations seeking to increase their capabilities and optimise costs. IDC says this trend is set to soar as firms embrace public cloud as the go-to platform for digital transformation.

What are the findings in Microsoft’s new whitepaper?

Per the whitepaper, public cloud spending in Australia is set to increase by 83 per cent from A$12.2 billion in 2022 to A$22.4 billion in 2026. Relatedly, public cloud spending in New Zealand is expected to nearly double in the same period from NZ$2.6 billion to NZ$5.1 billion.

In addition, public cloud adoption in Australia will generate A$123.7 billion in revenue across the nation’s cloud customer and supplier ecosystems in 2022 (equivalent to more than 5 per cent of GDP). Similarly, public cloud adoption in New Zealand will bear NZ$23.9 billion across the nation’s cloud customer and supplier ecosystems in 2022 (almost 6 per cent of GDP).

Public cloud deployments will drive cumulative net revenue of more than A$114 billion in Australia and NZ$21 billion in New Zealand for cloud customer and supplier ecosystems by 2026. Per the whitepaper, public cloud adoption and adjacent areas like security, data mining or analytics will create 596,750 jobs in Australia and 134,000 in New Zealand. Approximately 20 per cent of these jobs will require specific technical and IT-related digital skills.

What are Microsoft’s thoughts on the IDC whitepaper?

Steven Worrall, Managing Director at Microsoft ANZ, says, “It’s clear that the strong demand for public cloud services in Australia and New Zealand shows no signs of slowing, as organisations continue to transform their business operations, accelerate the pace of innovation and capitalise on technologies such as Artificial Intelligence and others like data analytics.”

Steven Worrall, Managing Director at Microsoft ANZ
Steven Worrall, Managing Director at Microsoft ANZ

He continues, “Cloud tech will also help firms remain resilient in today’s challenging economic climate by enabling them to simplify their IT systems and processes, reduce costs and minimise risks. We’re also excited to be adding significant new Generative AI capabilities.”

“This includes copilot productivity functionality across Microsoft 365, Dynamics 365, Security, and Teams platforms and adding Enterprise Azure OpenAI services to the cloud. These enable clients and devs to unlock more productivity and innovation from investments in Microsoft Cloud, while also leveraging our duty to responsibility and trust in a new field,” he sums up.

What does this mean for cloud organisations in ANZ?

“Cloud computing enables organisations to free up IT resources so they can achieve more technology and business innovation to drive revenue growth,” says Linus Lai, Research Vice President at International Data Corporation Asia/Pacific and co-author of the whitepaper.

“Investment in cloud computing services also drives revenue growth for organisations that make up the supplier ecosystem. This ecosystem encompasses systems integrators, software providers, and additional professional services providers,” further emphasizes Mr Lai.

Linus Lai, Research Vice President at International Data Corporation APAC
Linus Lai, Research Vice President at International Data Corporation APAC

With the demand for digital skills already high and getting higher, organisations should be investing in upskilling their existing workforce to build the necessary cloud knowledge and capabilities. The whitepaper notes that managing cloud environments requires specialised capabilities and that the availability of these skills has not been able to keep up with demand.

This is a key hindrance for firms on their cloud adoption journey. In fact, the whitepaper finds that a shortage of people with relevant skills is one of the top 10 governance-related hurdles for Australian and New Zealand businesses seeking to take full advantage of the cloud.

Furthermore, the IDC whitepaper says organisations with existing cloud migration strategies will continue to adopt public cloud services pre-emptively to drive business efficiency, while those without strategies in place will be forced to adapt to the cloud reactively.