Throughout 2024, we've heard big claims that CIOs are abandoning public cloud infrastructure and moving back to on-prem hardware and software.
Now, Gartner has released new statistics which appear to rain on the repatriation parade, suggesting that the cloud will continue flying high throughout next year.
The analyst predicted that worldwide end-user spending on public cloud services will soar to a total of $723.4 billion in 2025, up from $595.7 billion in 2024 - a rise of over 20%.
“The use of AI technologies in IT and business operations is unabatedly accelerating the role of cloud computing in supporting business operations and outcomes,” said Sid Nag, Vice President Analyst at Gartner.
“Cloud use cases continue to expand with increasing focus on distributed, hybrid, cloud-native, and multi-cloud environments supported by a cross-cloud framework, making the public cloud services market achieve a 21.5% growth in 2025.”
Gartner also forecasted hybrid cloud adoption growth between now and 2027 and said it expects 90% to adopt this approach. The most urgent challenge they will face when combining the dual difficulties of managing cloud migration and GenAI adoption will be data synchronisation across the hybrid cloud environment.
Overall, all segments of the cloud market are expected to record a double-digit growth rate in 2025 |highlighting how I&O leaders are pressured to effectively integrate I&O into their GenAI strategies and prepare for running AI and GenAI infrastructure at the edge".
The table below shows Gartner's forecast for worldwide end-user public cloud spending.
| 2024 Spending | 2024 Growth (%) | 2025 Spending | 2025 Growth (%) |
Cloud Application Infrastructure Services (PaaS) |
171,565 |
19.1
|
208,644
|
21.6 |
Cloud Application Services (SaaS) |
250,804 |
18.1 |
299,071 |
19.2 |
Cloud Desktop-as-a-Service (DaaS) |
3,466 |
7.7 |
3,849 |
11.1 |
169,818 |
21.3 |
211,856 |
24.8 | |
Total Market | 595,652 | 19.2 | 723,421 | 21.5 |
You shall not Paas? Well...
The rise of "curated, private and secure" Gen AI models tailored to specific industries and verticals will "continue to drive the growth of public cloud services spending globally.
Over the next year organisations will "increasingly be attracted to the efficiencies of cloud infrastructure and platform services" (CIPS), which Gartner defines as a full-featured platform in which Infrastructure-as-a-Service (IaaS) and Platform-as-a-Servuce capabilities are delivered as integrated cloud services.
“Organisations are choosing CIPS because workloads of today are complex, and organisations are seeking integrated platforms to simplify development, deployment and operations. Organisations deploying a multicoud adoption model, which is still recording growth, are also driving spend on CIPS,” Nag said.
The analyst house expects that cross-cloud integration frameworks (CCIF) that integrate data and workloads to operate collaboratively across clouds, making "multi-cloud a reality", will be a "key driver" of CIPS adoption. It predicted that organisations would "demand" cross-cloud federated GenAI capabilities to serve advanced AI workloads and use cases.
Gartner expects end-user spending on CIPS to grow 24.2% in 2025 and reach $301 billion. Over the same periods, CIPS will account for 72% of IT spending on IaaS and PaaS, up from 70% in 2022.
Cloud remains on the horizon
At the end of October, IDC released its own repatriation research, which found that half of cloud buyers spent more on cloud than they expected in 2023, with 59% "anticipating similar overruns" in 2024.
"While repatriation is a growing trend, it is not a wholesale migration," it wrote. "According to IDC’s Server and Storage Workloads Survey, only 8-9% of companies plan full workload repatriation. Instead, most organizations repatriate specific elements of their workloads, such as production data, backup processes, and compute resources."
It said that organisations repatriate workloads from the cloud for better cost management, performance optimisation, and enhanced security and compliance. On-premises solutions provide greater operational control, allowing businesses to tailor infrastructure to specific needs while avoiding unexpected cloud expenses.
Insurance giant's cloud repatriation
In October, The Stack confirmed that GEICO, an insurance firm owned by Warren Buffett’s Berkshire Hathaway, is repatriating many workloads from the cloud as it embarks on a major architectural overhaul.
Rebecca Weekly, GEICO’s VP of platform and infrastructure engineering at GEICO, which is the United States’ third largest automotive insurer by volume, told us: “We have a lot of data – and it turns out that storage in the cloud is one of the most expensive things you can do in the cloud, followed by AI in the cloud…”
The company first started moving to the cloud in 2013 for its 600+ applications but the journey was sub-optimal due to rising costs and declining availability.
