Public cloud services continue to be a critical driver of innovation.
Australian organisations are expected to spend nearly $26.6 billion on public聽cloud聽services in 2025, an increase of 18.9 per cent from 2024, according to the latest forecast from Gartner.
Spending on infrastructure-as-a-service (IaaS) will see the largest growth with an increase of 24.2 per cent, followed by platform-as-a-service (PaaS) at 21.1 per cent.
Gartner director analyst Adrian Wong said public cloud services continue to be a critical driver of innovation across Australian organisations this year.
鈥淎s momentum continues, many organisations are facing higher than expected costs and complex management issues, especially when it comes to scaling AI initiatives,鈥� he said. 鈥淭o deliver value,聽CIOs聽need a sharper cloud strategy, one that prioritises return on investment but also keeps pace with rapid technology shifts.鈥澛�
Gartner鈥檚 annual global survey of 3,186 of CIOs and technology executives, including 109 from Australia and New Zealand (ANZ), 83% of ANZ CIOs said cloud platforms remain one of the top technology investments in 2025, behind cybersecurity and data analytics.
Gartner noted all cloud segments experienced growth, with software-as-a-service (SaaS) remained the largest end-user spending category in Australia, with forecast of it reaching $13 billion this year.
This was a 15.5 per cent increase from 2024, due to continued investments in cloud-based application software and, according to Gartner, was driven by functional expansion and聽generative AI聽integration capabilities.聽
鈥淟egacy modernisation, cost optimisation and the adoption of AI-driven workloads continue to drive strong demand for cloud services,鈥� said Gartner principal analyst聽Hardeep Singh.
鈥淭hese factors are expected to sustain cloud growth, particularly as enterprises seek agility and scalability amid uncertainty this year, as trade restrictions and tariffs dampen business confidence and introduce greater unpredictability into short-term planning,鈥� he said.
While the situation continues to change, a lot of cloud spend is tied to multi-year annuity contracts with providers.
鈥溌爉ore likely to affect input costs and disrupt supply chains for new or incremental cloud spending, rather than existing usage,鈥� he said. 鈥淭his may lead to cautious spending by providers and delays in data centre expansions, prompting marginal adjustments to cloud spending projections.
鈥淒espite this, the cloud market鈥檚 underlying momentum remains intact.鈥�
