Organisations deploying generative AI will look to the public cloud for scale.

New Zealand organisations are shifting to the cloud at pace, with spending on public cloud services expected to grow by 22.3 per cent year-on-year.

Local growth in public cloud investment is also expected to be higher than the 19.3 per cent Gartner is forecasting for Australia and the 20.4 per cent expected globally.

Infrastructure-as-a-service (IaaS) is forecast to experience the highest local growth at 27.1 per cent, according to Gartner, followed by platform-as-a-service (PaaS) at 22.5 per cent.

In total, Kiwi organisations are expected to spend $4 billion on public cloud services in 2024 and Australian organisations A$23.2 billion (NZ$25.2 billion).

Worldwide end-user spending on public cloud services was forecast to total US$678.8 billion (NZ$1.15 billion) in 2024, up from US$563.6 billion (NZ$959.7 billion)

IaaS was forecast to experience the highest global end-user spending growth in 2024 at 26.6 per cent, followed by PaaS at 21.5 per cent.

“Cloud has become essentially indispensable,” said Sid Nag, vice president analyst at Gartner. 

“However, that doesn’t mean cloud innovation can stop or even slow. The tables are turning for cloud providers as cloud models no longer drive business outcomes, but rather, business outcomes shape cloud models.”

Organisations deploying generative AI services, for example, would look to the public cloud given the scale of the infrastructure required, Nag said.

To deploy GenAI effectively, however, organisations would require cloud providers to address nontechnical issues related to cost, economics, sovereignty, privacy and sustainability. 

"Hyperscalers that support these needs will be able to capture a brand-new revenue opportunity as GenAI adoption grows," Nag said.

Another key trend driving cloud spending was the rise of industry cloud platforms addressing industry-specific needs by combining SaaS, PaaS and IaaS services into a product offering with composable capabilities. 

Gartner predicted that by 2027, more than 70 per cent of enterprises will use industry cloud platforms to accelerate business initiatives, up from less than 15 per cent in 2023.

“GenAI adoption will also support the growth in industry cloud platforms,” said Nag. 

“GenAI models that are applicable across diverse industry verticals might require significant customisation, affecting scalability and cost-effectiveness." 

Public cloud providers could position themselves as partners in the responsible and tailored adoption of GenAI by building on the same approaches applied to industry clouds, sovereign clouds and distributed clouds, he said.

Last month, Gartner forecast worldwide IT spending would total US$5.1 trillion in 2024, an increase of eight per cent from 2023.