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On-premises revenue growth is greatly outpaced by that of the cloud

State of the OpenCloud 2022 is a research by Battery Ventures that analyses the current state of cloud computing and open-source software and provides useful guidelines for cloud businesses.

Despite the present financial context, cloud computing giants like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud have shown substantial growth resilience and profitability at vast scale. As digital transformation accelerates across sectors and more workloads transfer to the cloud, companies like Databricks (a Battery portfolio company) and Snowflake have developed billion-dollar businesses on top of these huge cloud suppliers, and there is considerable space for growth.

Increased cloud cover

For the four largest infrastructure-software providers (MongoDB, Confluent, Elastic, and Splunk), the cloud revenue CAGR was between 72% and 200% between 2018 and 2022. Comparatively, the CAGR for on-premises solutions was between 4% and 55%.

Given the potential for industry upheaval, Battery estimates that by 2022 cloud spending will account for around 25% of the $919 billion total business IT market expenditure. Battery claims a quantum leap in cloud usage across all sectors and economies due to rising need to boost productivity and efficiency in the face of high prices.

“Many cloud firms are displaying solid growth and even profitability while the larger IT industry remains relatively under-penetration by cloud; there’s still lot of potential to expand,” said Danel Dayan, vice president at Battery and one of the report’s authors.

“While it remains to be seen what will happen in the IT business in the next few months, given the market downturn, we are sure that the cloud, and open-source software, will soon alter industries in ways we have never seen before,” Dayan added.