Australian public cloud spend in 2025 forecast to reach A$26.6 billion

Australian organisations will increase their public cloud spending to A$26.6 billion in 2025, a substantial rise of 18.9 per cent from 2024 levels, analyst firm Gartner forecasts.

Infrastructure-as-a-service (IaaS) leads this growth with a forecasted 24.2 per cent increase, followed by platform-as-a-service (PaaS) at 21.1 per cent.

"Public cloud services continue to be a critical driver of innovation across Australian organisations this year," Adrian Wong, director analyst at Gartner, said.

"As momentum continues, many organisations are facing higher than expected costs and complex management issues, especially when it comes to scaling AI initiatives," Wong said.

The findings were revealed at the Gartner IT Infrastructure, Operations & Cloud Strategies Conference taking place in Sydney this week, a key event for infrastructure and operations leaders across the Asia-Pacific region.

Gartner's annual global survey included 109 respondents from Australia and New Zealand.

Some 83 per cent of ANZ CIOs identified cloud platforms as one of their top technology investments for 2025, ranking behind only cybersecurity and data analytics.

Software-as-a-service (SaaS) maintains its position as the largest end-user spending category in Australia, with forecasts showing it will reach almost A$13 billion in 2025, a 15.5 per cent increase driven by functional expansion and generative AI integration capabilities.

Even the smallest segment, Desktop-as-a-Service (DaaS), is projected to grow by 11 per cent, demonstrating the comprehensive nature of cloud adoption across all service types.

"Legacy modernisation, cost optimisation, and the adoption of AI-driven workloads continue to drive strong demand for cloud services," Hardeep Singh, principal analyst at Gartner, said.

"These factors are expected to sustain cloud growth, particularly as enterprises seek agility and scalability amid uncertainty this year," Singh added.

Singh noted that while global trade restrictions and tariffs have introduced greater unpredictability into short-term planning, much of cloud spending is tied to multi-year contracts with providers, helping maintain market stability.

The research suggests that tariffs are more likely to affect input costs and disrupt supply chains for new cloud spending rather than existing usage, potentially leading to cautious spending by providers and delays in data centre expansions.

Despite such challenges, Gartner analysts believe the cloud market's underlying momentum remains strong as Australian organisations continue digital transformation efforts throughout 2025.