Source: Cisco Global Cloud Index
The emergence of public cloud has driven dramatic changes across the entire IT landscape. The recent consolidation around Amazon Web Services (AWS), Microsoft Azure and Google and the significant uptick in deeper, broader enterprise adoption of public cloud as a service delivery platform have resulted in a new, large wave of spending growth: according to Gartner's forecast on worldwide public cloud services, spending on public cloud infrastructure services will almost triple over the next five years growing from approximately $39.5 billion in 2016 to over $118 billion in 2021 (see footnote below).
As the chart above indicates, much of this growth in spending is attributable to enterprises shifting an increasing proportion of their compute workloads to public cloud platforms such as AWS, Azure, or Google.
With the rapid growth of enterprise workloads in public cloud comes the need for the same types of monitoring, management, control, security and automation that enterprises have deployed in their private data centers. This is creating a large and rapidly growing market opportunity for vendors of software solutions that help enterprises manage public cloud infrastructure. This same shift in enterprise usage to public clouds is also disrupting the service provider landscape. Traditional service providers that have historically done everything from deploying on-premise solutions to offering hosted or managed services are rapidly developing new services around public cloud to help clients transition from on-premise to public and hybrid cloud environments. As a result, this also is leading to new growth opportunities for consulting firms, MSPs and other service providers and the technology providers that help power their solutions.
One of our recent clients, CloudCheckr, is emblematic of these trends. CloudCheckr experienced explosive growth in demand from both enterprise and MSP customers seeking to optimize the cost, performance and security of their public cloud usage. Signal Hill advised CloudCheckr in connection with its $50m capital raise from Level Equity.
Signal Hill works with a number of companies addressing the public cloud market and is well positioned to advise companies in connection with both raising capital and M&A transactions. If you'd like to discuss the public cloud market or have any questions about the material above, please contact the authors, Joel Strauch and Matt Fiore.
Footnote: Data derived from addition of Cloud Application Infrastructure Services (PaaS) Total, Cloud Application Services (SaaS) Total, Cloud Management and Security Services Total segments in "Forecast: Public Cloud Services, Worldwide, 2015-2021, 1Q17 Update," Gartner, Inc., April 4, 2017.
About Signal Hill
Signal Hill Capital Group LLC, along with its affiliate, Signal Hill LLC (together, "Signal Hill"), is a leading investment banking and advisory boutique serving the M&A and private capital raising needs of growth companies and was named 2016 Boutique Technology Investment Bank of the Year by the Global M&A Network. Signal Hill's experienced bankers provide deep domain expertise and an unyielding commitment to clients in Technology, Media and Telecommunications (TMT) and Services. With more than 600 completed transactions and offices in Baltimore, Bangalore, Boston, Mumbai, Nashville, New York, Reston and San Francisco, Signal Hill leverages deep strategic industry and financial sponsor relationships to help our clients achieve Greater Outcomes. For more information visit www.signalhill.com.
Enterprises & Public Cloud Infrastructure: A New Wave of Acceleration