Australian public cloud spend to hit $23.3B in 2024: Gartner

Gartner has forecast Australian cloud spending will increase 19.7 percent to $23.3 billion in 2024, while noting the challenge organisations face to manage consumption-based cloud pricing.

Spending on infrastructure and platform-as-a-service (IaaS and PaaS) is forecast to grow by 24.5 per cent and 22.4 per cent respectively.

Meanwhile, spending on software as a service (SaaS) and desktop as a service (DaaS) are expected to grow 18.3 percent and 15.8 per cent respectively.

“Cloud services are fuelling innovation in emerging areas such as generative AI (GenAI), which is finally starting to have an impact in Australia,” said Michael Warrilow, VP analyst at Gartner.

“Local CIOs were somewhat slow to invest but that’s changing as organisations now understand how the technology can benefit their operations. Cloud will continue to be best suited for the delivery of GenAI-enabled applications at scale.”

Warrilow noted that “in many cases Australian organisations don’t yet have the discipline to deal with consumption-based cloud pricing."

"CIOs need to invest in cloud financial management to ensure they don't blow the budget.”

Australian Public Cloud Services End-User Spending, 2023-2024 (Millions of AUD)

Source: Gartner (May 2024)

Increasing investment in GenAI

According to Gartner, GenAI is rapidly emerging as a key driver and differentiator of future cloud demands, with new technologies and methodologies to develop and operate infrastructure and platforms for it, such as AI chips, GenAI-enabled virtual assistants, prompt engineering and responsible AI.

“We’ll see similar patterns in Australia as GenAI capabilities continue to evolve,” said Warrilow.

“Australian CIOs must determine the best adoption model for their needs, whether to build a model from scratch, or focus on AI capabilities being integrated into the applications they buy. If they don’t identify the potential value to their organisation, they risk over-investing.”

Gartner said spending on GenAI will primarily be incorporated into enterprises through existing IT spending in the long-term, through software, hardware and services they are already using.