Platform-As-A-Service Market

The forecast period predicts that the Global Platform as a Service (PaaS) Market will grow at a CAGR of 19.6%, reaching a size of USD 164.3 billion by 2030, compared to USD 56.2 billion in 2023.

Market Share of Platform as a Service
The market's growth is expected to be driven by several key factors, including the need to reduce application development time and costs, as well as a focus on streamlining application management. However, hindrances such as cloud washing and security concerns associated with adopting public cloud services are likely to limit market growth.

Impact of COVID-19
The report covers the impact of the COVID-19 pandemic on the market. The pandemic has had a positive effect on the growth of the Platform as a Service market. The increased demand for cloud-based business continuity tools and services, the reliance on public cloud services to achieve short-term business objectives, and the increased spending on cloud services by major industries due to COVID-19 have contributed to this positive impact. However, reduced industry spending as a result of the pandemic is expected to affect the adoption of PaaS solutions and services.

Market Dynamics of Platform as a Service

Driver: Increasing demand to reduce time to market and application development costs
Companies are experiencing rapid changes in their technological landscape, including infrastructure development and software application deployment. Time to Market (TTM), which refers to the time taken to introduce a product or feature, plays a crucial role in determining an organization's success, along with the associated development costs. Companies prioritize TTM and strive to improve it, but many face challenges in achieving their desired goals due to inefficiencies in their overall digital landscape.

Enabling developers and improving customer engagement and experiences are the primary goals of digital transformation. Companies strive to introduce their products as quickly as possible because the first software product entering the market has the potential to capture up to 70% of the market share. Failure to meet time to market (TTM) targets can lead to financial losses for companies. Studies have shown that introducing a product six months later to the market can result in a 33% decrease in profit over five years. Similarly, if a product is launched on time but exceeds the budget by 50%, the profit will be reduced by approximately 4%.

Reducing TTM and minimizing application development costs have several benefits, including optimizing internal processes, refining software product development approaches, eliminating development inefficiencies, and fostering collaboration. Therefore, companies are heavily focused on decreasing TTM and application development costs to ensure timely release of major product versions or small updates, enabling them to stay competitive in the market.

Restraint: Cloud washing hinders the PaaS market growth
The term "cloud washing" is used to describe the practice of marketing teams labeling their software in a way that makes it appear more appealing. Cloud-washed PaaS solutions are different from cloud-native offerings. Cloud-washed platform as a service solutions may have similar architecture and programming models, but they offer limited cloud characteristics and only provide incremental improvements. In contrast, cloud-native solutions inject behavior into applications, decouple application code from run-time infrastructure details, increase application density, and enable distributed interactions. It can be challenging for end users to distinguish between cloud-washed and cloud-native PaaS solutions. Cloud-washed solutions consume significant machine resources, such as CPU and memory, and require increased administration effort. Consequently, the use of cloud-washed solutions is expected to impede market growth.

Opportunity: Rapid growth of the mobile app ecosystem
The mobile ecosystem is experiencing rapid expansion, with app development playing a crucial role in fueling its growth. As digital enterprises continue to proliferate, the development of enterprise mobile apps has become a top priority for organizations. According to a report, 50% of IT organizations plan to deploy at least ten mobile apps within the next two years. The demand for certain mobile applications has surged due to the COVID-19 pandemic. Technologies like 5G and cloud computing have contributed to the development of these mobile applications. PaaS providers offer a range of tools for developing tablet, mobile, and web platforms, encompassing various functions such as data recovery, backups, security, licensing, support, maintenance, and server-based scalability. By leveraging platform as a service providers, developers can enhance application development while leaving other aspects in the hands of the service providers.

Challenge: Vendor lock-in issues
Vendor lock-in occurs when customers are unable to switch to other vendors due to high switching costs, financial constraints, and limited workforce. The lack of standardization in the platform as a service market is another significant factor contributing to vendor lock-in. Additionally, many customers are unaware of the standards that enable interoperability and portability of applications when utilizing services from vendors. To address this challenge, PaaS vendors strive to maintain strong business relationships with customers to ensure their continued use of services.

During the forecast period, the Application PaaS (aPaaS) segment is expected to hold a larger market size. Government organizations are increasingly adopting aPaaS due to its ability to support modernization efforts while meeting stringent security requirements. For example, in May 2019, Appian partnered with Smartronix Inc., a premier partner of AWS, to deliver the speed and impact of the low-code Appian platform to the Federal Government and the Department of Defense (DoD) through the AWS or Microsoft Azure government cloud platform. Enterprises are also embracing the PaaS segment because of the numerous benefits it offers, including reduced coding time, expanded development capabilities without requiring additional staff, cross-platform application development, access to support tools, support for geographically distributed teams, and efficient management of the application development lifecycle.

Public cloud deployment to hold a larger market size
The public cloud segment is experiencing growth, driven by the adoption of public PaaS by various SMEs. Public PaaS offers a comprehensive range of services for data recovery and infrastructure, encompassing hardware, operating systems, software, and middleware servers to support applications across different platforms. Enterprises are readily embracing public cloud services due to their ease of implementation. Additionally, public cloud solutions facilitate access to platform offerings such as big data, data analytics, and the Internet of Things (IoT). In response to the increasing demand for public cloud solutions, organizations are transitioning towards public cloud offerings. For example, Red Hat provides its public PaaS version of OpenShift, an open-source enterprise PaaS, on its Red Hat Enterprise Linux (RHEL) platform.

During the forecast period, large enterprises are expected to dominate the market share. The digitalization trend has gained significant momentum among large enterprises. With a substantial workforce and multiple revenue streams, large enterprises exhibit a higher level of connectivity, bandwidth, and mobility. These organizations are keen to invest in new and advanced technologies to effectively run their businesses. The platform as a service market holds a strong position in large enterprises, as their IT infrastructure tends to be more complex compared to SMEs. The increasing demand for employees to access computing resources and applications from any location and at any time has posed challenges for enterprises in terms of proper data storage, data center maintenance and management, and the ability to focus on core business operations.

Manufacturing industry vertical to hold a significant market share during the forecast period
The demand for faster delivery and increased production is experiencing rapid growth. Manufacturing companies are turning to cloud technology to meet these escalating demands. It has become essential for the manufacturing sector to adapt to global changes in connectivity and computing. It is projected that by 2023, approximately 50% of software utilized by manufacturers will be cloud-based. The cloud has facilitated the adoption of emerging technologies like Machine-to-Machine (M2M) communication and the Internet of Things (IoT), leading to large-scale process transformation and digitalization within the manufacturing vertical. These factors are driving the demand for cloud computing, enabling improved customer service and facilitating easier sustainability in the highly competitive market. Many manufacturers are leveraging platform as a service (PaaS) offerings for their mission-critical deployments. PaaS not only provides software and web-based applications but also offers third-party hardware and software for factory connectivity and data retrieval. PaaS services assist the manufacturing vertical in enhancing operational efficiencies within their factories.

During the forecast period, North America is expected to account for the largest market size. The region shows great promise across major verticals such as IT, BFSI (Banking, Financial Services, and Insurance), and telecommunications. The increasing allocation of budgets for cloud services among enterprises further contributes to the market growth in North America. It is anticipated that North America will be the most promising region for telecommunications, IT and ITeS (Information Technology-enabled Services), BFSI, as well as the government and public sector. The size of the PaaS market in North America is projected to steadily expand during the forecast period as enterprises embrace advanced application development technologies as part of their strategies to thrive in the competitive market.

Platform as a Service Market - Key Players
To enhance their offerings in the market, PaaS vendors have implemented a range of growth strategies, including new product launches, product upgrades, partnerships and agreements, business expansions, and mergers and acquisitions. Globally, there are several major vendors providing PaaS solutions and services. These vendors include AWS (US), Microsoft (US), Alibaba Cloud (China), IBM (US), Salesforce (US), Google (US), Oracle (US), SAP (Germany), Mendix (US), Zoho Corporation (India), Engine Yard (US), Apprenda (US), VMware (US), ServiceNow (US), Plesk (Switzerland), Render (US), CircleCI (US), Tray.io (US), Cloud 66 (UK), AppHarbor (US), Jelastic (US), Platform.sh (France), Scalingo (France), PythonAnywhere (US), and Blazedpath (US).

This research report segments the PaaS market based on components, deployment types, organization sizes, verticals, and regions.
Platform as a Service Market Based on the type:
• Application PaaS (aPaaS)
• Integration PaaS (iPaaS)
• Database PaaS (dbPaaS)
• Others

Based on the deployment:
• Public
• Private

Based on the organization size:
• Large Enterprises
• SMEs

Platform as a Service Market Based on the vertical
• BFSI
• Consumer goods and retail
• Telecommunication
• IT and ITeS
• Manufacturing
• Healthcare and life sciences
• Energy and utility
• Others

Based on the region:
• North America
o US
o Canada
• Europe
o UK
o Germany
o France
o Rest of Western Europe
o Central and Eastern Europe
• APAC
o China
o Japan
o Rest of APAC
• MEA
o KSA
o Rest of MEA
• Latin America
o Brazil
o Mexico
o Rest of Latin America

 Recent Developments
• Microsoft introduced its new Wisely blockchain-enabled cPaaS offerings in January 2021. This solution targets enterprises, mobile carriers, OTT players, marketers, and industry regulators, aiming to enhance the quality of their service.

• Oracle expanded its security portfolio in September 2020 by introducing new cloud services designed to protect cloud workloads and data from cyber threats. The three new services, Oracle Data Safe, Oracle Cloud Guard, and Oracle Maximum Security Zones, offer centralized security configuration and automated enforcement of security practices.
• In June 2020, IBM joined forces with Wipro to accelerate the cloud transformation journey. Through this collaboration, Wipro will develop hybrid cloud offerings to facilitate businesses in migrating, managing, and transforming their operations across public or private clouds.
• AWS acquired CloudEndure, an Israeli-based company, in January 2019. CloudEndure specializes in Disaster Recovery (DR) services, and this acquisition enables AWS to provide customers with enhanced and innovative solutions for migration, backup, and DR.