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Cloud marketplace and digital transformation growth numbers

Bessemer Venture Partners released their State of the Cloud 2022 report.    Some highlights: 

  • For every dollar a SaaS business spends on its sales team, the company will see a dollar of recurring revenue materialize in less than a year and grow nearly perpetually.
  • Cloud marketplaces are still nascent, but in 2021, Bessemer saw marketplace transactions grow an estimated 70% to $4 billion, which is 3x faster growth than the public cloud. 
  • The report also focused on more “local” clouds – localization to a market or region.
  • Finally, the report focused on the measure of an “exceptional” startup as a Centaur —  a business that reaches $100 million of annual recurring revenue (ARR)

IDC released an update to the DC Worldwide Digital Transformation Spending Guide, forecasting global spending on the digital transformation (DX) of business practices, products, and organizations to reach $1.8trn in 2022, an increase of 17.6 percent over 2021.    IDC identified the US as the largest geographic market for DX spending in 2022, accounting for nearly 35 percent of the worldwide total. 

Western Europe will be the second largest region for DX spending, followed closely by China. 

Why do we care?

Most IT services companies are not striving to be a unicorn or a centaur.   I remain bullish on old-school ideas such as entrepreneurs building viable, local small businesses that serve their customers, employees, and own personal needs.

That said, it’s a pivotal skill to understand the financial incentives and goals of the technology vendors those services are built upon.   

“Cloud marketplaces are still nascent.”     $4 billion is still a pretty significant number.   The partners think there’s something there, and that’s not to be ignored.  

Then again, digital transformation in the trillions.   That’s the mainstream space.      Cloud marketplaces are the coming, digital transformation the already here and growing.