The impact of COVID-19 will see off-premises cloud service providers (CSPs) shift their priorities

27 May 2020

The impact of COVID-19 this year and next will cause off-premises cloud service providers (CSPs) to shift their priorities to help end users, customers and partners adapt to new norms.

The COVID-19 pandemic is significantly affecting the business world, with impact felt from the data center compute, storage and networking markets all the way up to the applications running in the cloud, as reported by the Omdia Cloud & Colocation Services for IT Infrastructure & Applications Market Tracker .

“On one hand, data-center operators are experiencing massive surges in consumer usage of compute resources due to school closures, social distancing and government work-at-home mandates. This is making it increasingly imperative to provide a reliable, scalable and secure cloud,” said Devan Adams, principal analyst at Omdia. “The new rules for society have created new norms, resulting in increased demand for e-learning, remote working, binge television watching and other at-home activities. On the other hand, IT infrastructure services—i.e., IaaS, CaaS, PaaS—are experiencing equally negative effects as many small-and-medium businesses (SMBs) either temporarily shut down or prepare to close their doors permanently as they are unable to remain financially viable.”

Accounting for the two contradictory effects COVID-19 is having on the cloud services market, Omdia has forecast the impact of the pandemic on 2020 and 2021 cloud service revenue:

• In 2020, software as a service (SaaS) market revenue will increase by 4 to 5 percentage points compared to previous estimates. In 2021 the market will see a 2 to 3 point increase.
• In 2020, IT infrastructure service revenue will decrease by 2 to 3 percentage points versus previous estimates. In 2021 it will suffer a 1-to-2 point shortfall.

It should be noted that COVID-19 only has a partial impact on Omdia’s overall 2020–2021 forecast updates. Other important aspects have been factored as well, including prior 2019 actual results, new and updated cloud services, and data center footprint expansions.