Gartner Forecasts Public Cloud Services in the Middle East and North Africa to Grow 21% in 2020

Press release
Published February 16th, 2020 - 11:25 GMT
Gartner Forecasts Public Cloud Services in the Middle East and North Africa to Grow 21% in 2020
Sid Nag
Highlights
 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, Inc.

 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, Inc.

“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 (see Table 1). “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.

Table 1. MENA Public Cloud Service Revenue Forecast, 2019-2021 (Millions of U.S. Dollars)

Segment

2019

2020

2021

Cloud business process services (BPaaS) total

388

440

495

Cloud application infrastructure services (PaaS) total

352

434

524

Cloud application services (SaaS) total

1,312

1,585

1,895

Cloud management and security services total

182

214

251

Cloud system infrastructure services (IaaS) total

226

313

421

Grand Total

2,460

2,986

3,587

Source: Gartner (February 2020)

CRM and ERP Remain Growth Drivers

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.

For more information, Gartner clients can refer to “Forecast: Public Cloud Services, Worldwide, 2017-2023, 4Q19 Update.”

Additional analysis on driving business performance will be presented during Gartner IT Symposium/Xpo 2020, the world's most important gathering of CIOs and other IT executives. IT executives rely on these events to gain insight into how their organizations can use IT to overcome business challenges and improve operational efficiency. Follow news and updates from the conferences on Twitter using #GartnerSYM.

Upcoming dates and locations for Gartner IT Symposium/Xpo include:

March 2-4, 2020: Dubai

May 11-14, 2020: Toronto

September 14-17, Sao Paulo

October 5-7, Cape Town

October 18-22, Orlando

October 26-29, Gold Coast, Australia

November 3-6, Kochi, India

November 8-12, Barcelona

Background Information

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