Australia’s managed cloud services (MCS) industry will grow to US$1.2 billion this year as businesses continue to overhaul their legacy infrastructures.
According to a new report by research firm IDC, the industry generated US$816 million in 2017 and will rise to US$2.03 billion in 2022.
The growing appetite for legacy application modernisation underpinned the bulk of demand, with 42 per cent of Australian firms claiming to use MCSs to upgrade dated infrastructure onto a private cloud.
A further 15 per cent said they intended to replace old infrastructure with public cloud infrastructure-as-a-service (IaaS), while 14 per cent claimed they needed to re-host legacy applications onto private or public cloud IaaS.
Another 14 per cent of enterprises also cited migrating custom developed legacy application for use on private or public cloud IaaS as their primary focus.
Of all the environments, the hybrid cloud will comprise nearly 50 per cent of the market by 2022.
According to IDC, the increased adoption of MCS has directly impacted traditional outsourced managed services and the services providers due to increasing competition from public cloud vendors offering their own managed cloud services.
"For services providers competing in the managed cloud services market, it is essential that they align their business with enterprise's buyer segments and requirements, have broad set of technical capabilities, be able to deliver business outcomes and have a strong ecosystem of partners (specifically the public cloud providers)," IDC Australia senior market analyst Prabhitha Dcruz said.