New research from Omdia’s infrastructure software market forecast has revealed the market is set to grow at a compound annual growth rate (CAGR) of 16,5% over the period 2022 to 2027, which will make the market worth an estimated $358-billion by the end of 2027.

Omdia’s infrastructure software market forecast provides revenue opportunity estimates for 12 key segments – database infrastructure and management, server virtualisation, storage virtualisation, network virtualisation, desktop-as-a-service and VDI, hyperconverged infrastructure, data protection, multi and hybrid cloud management and orchestration, DevOps (release management), AIOps, container management platforms/services, and data centre infrastructure management (DCIM) – for the period 2022 to 2027, spanning four regions, eight subregions, 27 countries, and 16 vertical industries.

The software infrastructure market was worth approximately $167-billion at the end of 2022. Omdia predicts growth will be driven by the convergence of some key technologies that are shaping the technology landscape for the foreseeable future.

The main technology trends are as follows:

* The rise of generative AI. Which requires a complex mixture of cloud-based and on-premises resources to train the models and then execute these models. Managing this complexity is testing the skills of IT staff and is one reason CIOs are keen to adopt more IT automation.

* Changing the application mix. The shift to adopt SaaS applications as well as cloud-based PaaS for developing serverless applications by enterprise customer. This shift is driving greater demand for DevOps, AIOps, and CloudOps capabilities.

* Increased security and protection. The recognition that protection against ransomware requires the data to be backed up and then restored quickly. The challenge is to ensure the backup copies are not infected so that the ransomware re-appears.

* Data privacy. The growth in interest in sovereign cloud, which is challenging the management of these new sovereign environments to ensure that they comply with local regulations and laws on data protection and privacy. A secondary market that is benefiting from this interest is hyperconverged infrastructure (HCI) as customers consider on-premises private clouds as the home for sovereign workloads and data.

* The growth of environmental sustainability. Which has highlighted the need for organisations to monitor and manage their impact on carbon emissions. Data centre infrastructure management (DCIM) is now critical to data centre operators in managing the use of power and its distribution.

“The need to transform the IT department and the business to meet this new demand requires newer more agile software infrastructure. The fact that container management software shows a CAGR of over 38% compared to server virtualisation at less than 7% demonstrates this shift perfectly,” says Roy Illsley, chief analyst and lead of Omdia’s IT operations research practice.

Although the cloud delivers agility, the on-premises data centre will remain an important part of any IT environment for the foreseeable future due to data sovereignty requirements, existing technical debt, and a lack of cloud related skills.

“In fact, the new as-a-service on-premises sector of the on-premises market is attracting workloads from the public cloud and is adding to the already complex picture IT operations need to manage,” says Vlad Galabov, research director at Omdia’s cloud and data centre research practice.

HCI is also proving a good candidate for some edge use cases, particularly where there is a lack of IT staff on the premises. This is introducing the need for the software infrastructure technologies to operate across and between these different worlds (cloud, edge, and on-premises), effectively forming the hybrid bridge ensuring organisations can adopt the most appropriate architecture that fits with their business strategy.

Added to this complexity is the need to meet increasingly tighter environmental requirements that governments will be introducing as part of their globally agreed targets to reduce greenhouse gas emissions, and dealing with the unknown impact that generative AI will have on business and technology.

While the newer agile software infrastructure capabilities show the fastest growth, the biggest market by value remains database infrastructure and database management demonstrating that data remains a core driver of business spending.

Another surprising aspect is the relatively low growth rate for data protection (backup and disaster recovery), which given the prevalence of ransomware is unusual. Omdia considers that most organisations believe their existing backup capabilities to be sufficient and the data protection spend is being diverted to security spend.

“Omdia predicts that infrastructure software spending in the Americas will grow from $82,7-billion in 2022 to over $172bn by the end of 2027,” Illsley says. “Our estimates point to India being the fastest-growing country over the forecast period with a CAGR of 26%, followed by China with a CAGR of 25,4% over the forecast period (2022-27), with Rest of Africa third, growing at 24,5%, albeit from a very low base. Africa is a continent to watch as it looks to deploy new technologies to help it reduce the technical divide/inequality in the continent.”