Report: Cloud Revenue Growth Far Exceeds On-Premises

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Battery Ventures' State of the OpenCloud 2022 report examines the cloud infrastructure and open source software landscape and offers operational best practices for cloud enterprises.

Cloud giants such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud have demonstrated significant growth sustainability and profitability at scale, despite the current macroeconomic environment. Billion-dollar companies like Databricks (a battery portfolio company) and Snowflake are built on these massive cloud providers, and there is significant room for growth, as digital transformation accelerates across all industries. sectors and that more and more workloads are moving to the cloud.

Strong cloud growth

Across four major infrastructure software companies (MongoDB, Confluent, Elastic, and Splunk), cloud revenue CAGR was at least 72% and as high as 200% from 2018 to 2022. On-premises CAGR , on the other hand, ranged from 4% to 55%.

Overall, Battery projects that cloud-related spending currently accounts for approximately 25% of the $919 billion in overall enterprise IT market spending in 2022, a proportion that will no doubt increase in the months and years forthcoming given the potential for market disruption. Amid growing pressure to improve productivity and efficiency and in a high inflation environment, Battery predicts that we will see a dramatic increase in cloud adoption across all industries and economies.

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Image source: Battery Ventures

"Many cloud companies are showing robust growth and even profitability as the broader IT market remains relatively underpenetrated by the cloud; there is still a long way to go," said Danel Dayan, vice president of Battery and one of the report's authors.

“Although it remains to be seen what will happen in the coming months in the technology industry, given the market slowdown, we are convinced that the cloud and open source software will soon transform industries from a way that we have never seen before,” added Dayan.

Methodology

The Battery Ventures 2022 OpenCloud Report is based on...