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Public cloud services revenue set to grow in 2020
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Public cloud services revenue set to grow in 2020

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Public cloud services revenue in the Middle East and North Africa (MENA) will total nearly $3 billion in 2020, an increase of 21% year over year, according to Gartner.

Sid Nag, research vice president at Gartner

“Government initiatives such as Smart Dubai, Smart Abu Dhabi, Israel’s Cloud Strategy and Bahrain’s Cloud First Policy of 2019 have bolstered cloud adoption among large organizations in the region,” said Sid Nag, research vice president at Gartner. “The move to digital business by organizations is driving cloud spend, where cloud is a key enabler and the platform that supports digital technologies.”

Organizations are also increasingly moving their applications and workloads to the public cloud as concerns around security and governance dissipate further. The collective economic goal of the MENA region to become more technology- and data-centric has been a cornerstone to this rapid acceptance of both the private and public cloud.

In addition, small and midsize businesses (SMBs) in MENA have started to increase their spending in public cloud services. SMBs in the region are focusing their investments in cloud deployments that will enable faster business analytics and artificial intelligence, both of which are key growth drivers for public cloud in the region.

Software as a service (SaaS) accounts for 53% of the total public cloud service revenue forecast in MENA and is set to total $1.6 billion in 2020. “SaaS products are typically sold via subscription, allowing companies to avoid large up-front licensing fees and capital costs. The cost-effectiveness of SaaS is one of the motivations for MENA organizations to increase their spending in the segment,” added Mr. Nag.

Customer relationship management (CRM) and enterprise resource planning (ERP) remain the top two segments driving the growth of SaaS in MENA. Gartner predicts that CRM software will represent 15% of total public cloud service revenue in MENA in 2020. This figure will continue to go up as businesses keep enhancing their customer experience.

ERP accounts for 12% of the overall public cloud service revenue forecast in MENA in 2020. “This is due to the fact that most independent software vendors have converted their ERP applications from on-premises, license-based offerings to cloud-based SaaS offerings,” said Mr. Nag.

Business intelligence (BI) applications is an emerging growth area for public cloud services in MENA. Revenue is on pace to total $29 million in 2020, an increase of 37% from 2019. This segment is the fastest-growing segment among SaaS offerings in the region in 2020. “While BI revenue is currently low in MENA, it is expected to achieve 30% growth over the next three years as local businesses leverage BI-based analytics to make smarter decisions and optimize their business operations,” said Mr. Nag.

Additional analysis on driving business performance will be presented during Gartner IT Symposium/Xpo 2020, where analysts will discuss technologies and trends shaping the future of IT, to be held between March 2-4 in Dubai, UAE.

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