Report: Cloud revenue growth far outpaces on-premises

Battery Ventures’ State of the OpenCloud 2022 report examines the landscape of cloud infrastructure and open-source software and offers operational best practices for cloud companies.

Cloud giants like Amazon Web Services (AWS), Microsoft Azure and Google Cloud have demonstrated significant growth durability — and profitability — at massive scale, despite the current macroeconomic environment. Billion-dollar businesses like Databricks (a Battery portfolio company) and Snowflake are built on top of these massive cloud vendors, and there is significant room to grow, as digital transformation accelerates across industries and more workloads shift to the cloud.

Heavy cloud growth

Across four major infrastructure-software companies (MongoDB, Confluent, Elastic and Splunk), cloud revenue CAGR was at least 72% and as much as 200% from 2018 to 2022. On-premises CAGR, by contrast, ranged from 4% to 55%.

Overall, Battery predicts cloud spend currently represents about 25% of the $919 billion overall enterprise IT market spend in 2022, a proportion that will no doubt increase in the months and years to come given the potential for market disruption. Amid increasing pressure to improve productivity and efficiency and a high-inflation environment, Battery predicts we will see a step-change increase in cloud adoption across every industry and economy.

“Many cloud companies are demonstrating robust growth and even profitability as the broader IT market remains relatively under-penetrated by cloud; there’s still plenty of room to grow,” said Danel Dayan, Battery vice president and one of the report’s authors.

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

Methodology

The Battery Ventures 2022 OpenCloud report relies upon publicly available data from Gartner, Pitchbook, the U.S. Bureau of Labor Statistics, CapIQ and company earnings reports. (Battery’s investments and exits are listed here.)

Read the full report from Battery Ventures.

Originally appeared on: TheSpuzz