The adoption of Artificial Intelligence and Public Cloud has grown exponentially, redefining CIO strategies worldwide.
Against this backdrop, the public cloud is emerging as the preferred platform for enterprise application development and deployment, with AI as the main driver of this transition.
Given these developments, how are AI and the public cloud influencing corporate IT strategies, and why are these technologies now a must-have for CIOs ?
How AI is fueling rapid growth in public cloud spending
By 2024, global spending on public cloud services is set to reach $805 billion, according to IDC, marking significant growth for the sector. This growth is supported by a CAGR of 19.4% between 2024 and 2028.
This growth is mainly driven by the rapid adoption of the cloud and innovation in artificial intelligence. The growing adoption of AI platforms by businesses, combined with their increased need for hosting on cloud servers, justifies this trend.
AI is therefore playing a major catalytic role in this dynamic, with massive investments in AI platforms, particularly in the PaaS (Platform as a Service) and IaaS (Infrastructure as a Service) segments.
By 2024, SaaS (Software as a Service) is set to remain the dominant segment, accounting for over 40% of total spending. However, PaaS and IaaS will also see significant growth, each accounting for almost 20% of spending. PaaS, particularly in the area of data management, will post an impressive five-year CAGR of 51.1%.
Furthermore, software security in SaaS will be a key area of investment, on a par with ERM (Employee Relationship Management) and CRM.
In terms of regional analysis, the United States continues to dominate the market, with forecast spending of $432 billion.
Western Europe ranks second with $167 billion, while the Asia-Pacific region (excluding Japan and China) is expected to reach $51 billion in spending.
Banking, software and information services, as well as retail, are collectively expected to invest $190 billion in 2024, making them the main contributors to spending. Other key sectors, such as telecommunications, media, entertainment and healthcare, will also play an important role in this dynamic. In addition, capital, life sciences and insurance are expected to be the fastest-growing sectors over this period.
Why AI is a key driver of Cloud ERP adoption
In the context of Cloud ERP, its adoption has grown in popularity in recent years, with 78.6% of companies now opting for the cloud to deploy their ERP, compared to just 65% previously. This trend is largely explained by the growing importance of the artificial intelligence present in these solutions, which has become a key criterion in the choice of a Cloud ERP solution.
This technology influences not only the choice of ERP, but also different types of projects, whether they concern initial implementation or digital transformation. Artificial intelligence also enhances business efficiency and agility in a constantly evolving digital environment. This explains why, today, AI partly influences decisions to integrate Cloud ERP.
What role will AI play in Cloud adoption ?
To benefit from AI’s capabilities, cloud infrastructure is essential. As AI algorithms are hosted on cloud platforms, the latter become crucial for their optimal operation. In this context, AI plays a decisive role in the choice of cloud solutions, particularly in the public cloud, where many applications mobilizing these technologies are deployed.
How SAP is leveraging Public Cloud and AI for business growth
For SAP, the Public Cloud facilitates the integration of emerging technologies such as AI and IoT, giving companies a competitive edge.
To support this transition, SAP is offering the “Grow with SAP” program, specially designed for SMBs and SMEs, to help them migrate to the public cloud.
This program offers a rapid, simplified solution for implementing SAP S/4HANA Cloud – Public Edition. This SaaS offering includes all key S/4HANA features, as well as AI solutions for analyzing large volumes of data in real time, extracting valuable information, improving decision-making, as well as predicting and detecting market trends.
Companies also benefit from access to SAP Business Technology Platform (BTP) and several of its integrated applications, where AI is also present. This PaaS (Platform as a Service) solution enables them to develop their own applications and interconnect all their IT tools within a single framework.
Gartner’s IT spending forecast: AI and the Public Cloud as growth engines
According to Gartner forecasts, global IT spending is set to reach $5,300 billion in 2024, recording growth of 7.5% on the previous year.
This increase is largely fuelled by AI adoption, particularly in datacentres, where equipment spending is set to grow by 24% to $293 billion, driven by generative AI.
The software market, including AI add-ons, is also expected to see significant growth of 12.6%, reaching $1,096 billion. In addition, IT services are expected to generate $1,600 billion (+7.1%), while telecoms services should reach $1,537 billion (+3%).
AI and the Public Cloud are proving to be essential growth drivers for businesses, transforming IT investments and redefining CIO strategies.
Looking ahead, the growing interdependence between these two technologies will continue to shape innovation. Investment is set to accelerate in the years ahead, promising new opportunities and a profound transformation of the technological landscape. SAP is also playing its part in this dynamic by developing its Grow with SAP offer, to engage and encourage adoption of the Public Cloud, as well as integrating the latest AI functionalities.
