Australian public cloud spending to exceed AUD $23.3 billion

Australian organisations are projected to spend over AUD $23.3 billion on public cloud services in 2024, marking a 19.7% increase from this year, according to the latest forecast from market research firm Gartner. This anticipated growth highlights the region's escalating commitment to cloud technology.

The largest segment of growth within this forecasted increase is expected in infrastructure-as-a-service (IaaS), with a remarkable 24.5% rise. Following closely is platform-as-a-service (PaaS), which is predicted to grow by 22.4%. Software-as-a-service (SaaS) holds its position as the largest spending category, projected to reach nearly AUD $11 billion in 2024, up 18.3% from 2023.

"Cloud services are fuelling innovation in emerging areas such as generative AI (GenAI), which is finally starting to have an impact in Australia," said Michael Warrilow, Vice President Analyst at Gartner. "Local CIOs were somewhat slow to invest but that's changing as organisations now understand how the technology can benefit their operations. Cloud will continue to be best suited for the delivery of GenAI-enabled applications at scale."

Warrilow's comments underscore the importance of cloud infrastructure in supporting the deployment and scale of GenAI technologies, which are rapidly becoming key drivers for future cloud demands. GenAI includes advancements like AI chips, GenAI-enabled virtual assistants, and other AI-driven methodologies.

Despite the overall positive growth trajectory, Warrilow highlighted a challenge for Australian organisations: managing cloud costs effectively. "Despite the local cloud market showing no signs of slowing down, there's increasing scrutiny from the business. In many cases, Australian organisations don't yet have the discipline to deal with consumption-based cloud pricing. CIOs need to invest in cloud financial management to ensure they don't blow the budget."

The significance of cloud platforms for ANZ (Australia and New Zealand) CIOs is evident from Gartner's annual global survey, which included over 2,400 CIOs and technology executives, with 87 respondents from ANZ. 79% of these respondents expect to allocate the second-largest amount of new or additional technology funding to cloud platforms in 2024, second only to cybersecurity investments.

As Australian organisations continue to modernise their applications, there's a shift from software-based to cloud-based business applications, driving the consistent growth in SaaS investments. Although beneficial, SaaS adoption isn't always elective, with many vendors moving to cloud-only delivery models regardless of customer preference.

Overall, Gartner analysts project that spending on GenAI will be integrated into existing IT investments, including software, hardware, and services already in use by enterprises. This pattern suggests that organisations will increasingly seek ways to incorporate GenAI capabilities into their current technological framework.