Australian organisations are expected to spend nearly $26.6 billion on public cloud 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.
“As momentum continues, many organisations are facing higher than expected costs and complex management issues, especially when it comes to scaling AI initiatives,” he said. “To deliver value, CIOs need a sharper cloud strategy, one that prioritises return on investment but also keeps pace with rapid technology shifts.”
Gartner’s 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 generative AI integration capabilities.
“Legacy modernisation, cost optimisation and the adoption of AI-driven workloads continue to drive strong demand for cloud services,” said Gartner principal analyst Hardeep Singh.
“These 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,” he said.
While the situation continues to change, a lot of cloud spend is tied to multi-year annuity contracts with providers.
“Tariffs are more likely to affect input costs and disrupt supply chains for new or incremental cloud spending, rather than existing usage,” he said. “This may lead to cautious spending by providers and delays in data centre expansions, prompting marginal adjustments to cloud spending projections.
“Despite this, the cloud market’s underlying momentum remains intact.”
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Source: News