Cloud Native Applications Market

[219 Pages Report] The global Cloud Native Applications Market size is projected to expand at a CAGR of 23.7% during the forecast period to reach USD 17.0 billion by 2028, size was valued USD 5.9 billion in 2023. An analysis of market trends is part of the new research report. The latest research includes conference and webinar materials, patent analysis, important stakeholder information, and pricing analysis. Flexibility and speed being key factors for cloud native applications to scale as enterprises can achieve quicker development and rolling out their application enhancements/updates, convenient application management, and significant flexibility in scaling app resources upwards or downwards automatically in order to meet real-time changes in demand.

The increasing cloud computing demand and hike in cloud traffic require cloud native technologies to empower organizations in building and running applications over public, private, and hybrid clouds to scale. To succeed in fast-paced, software-driven markets, companies must change the way they design, build, and use applications. Cloud-native application development is an approach to building, running, and improving apps based on well-known techniques and technologies for cloud computing. These are programs that are designed for a cloud computing architecture. Cloud native applications offer several benefits such as independent building up of the applications, so they’re managed and deployed individually, resilient architecture aids survival and remaining online even in the event of an infrastructure outage, cloud native applications due to interoperability and workload portability are often based on open source and standards based technology (cloud native services) which aids reduce vendor lock-in and results in increased portability, business agility, automation using DevOps automation(s) features, and container orchestrators such as Kubernetes and Docker, enterprises can deploy a software update with nearly zero downtime, which are strong driving forces of the cloud native applications market.

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Drivers: Cloud native development leverages getting apps to market swiftly

The cloud-native model helps enterprises to bring new features online so customers can use them instantly. According to an IBM survey, 73% of development executives, IT executives, and developers have reported that this model has resulted in quicker development and roll-out. As because the cloud-native approach encourages efficiency and flexibility, it directly stimulates and boosts business growth. Enterprises globally can scale resources to handle user demand and reach even more users quickly. By using this cloud platform, the company(ies) can be more responsive to and relevant to its application updates. This manner of continuous integration and continuous deployment (CI/CD) and self-service has gained popularity with customers, who, over recent times have become more likely to buy and use the app, as well as potentially share their experiences.

Restraint: Cost overrun as a limiting factor

Enterprises might find that the costs of cloud-native development can be dicey and potentially dangerous. Usage-based pricing can lead to unexpected costs if an application experiences a surge in traffic. Organizations need to carefully monitor their usage and plan accordingly, otherwise they are prone to face budget overruns. Several organizations have been charged USD 100,000 cloud bills in recent times when their calculation was USD 2,000. Cloud-native application development offers several advantages; however, organizations should be aware of these potential downsides and plan accordingly to fully experience the benefits of this approach.

Opportunities: Better reliability in accordance with IT infrastructure

With a microservices platform, there is no single point of failure. The independent services are fault-tolerant or fault-resistant (to a greater extent) and isolated from each other within their own runtime. This denotes that even when a failure occurs, developers can quickly isolate its impact, and one failure does not impact and take down the entire application. For instance, as Netflix’s streaming service grew, it realized that it needed a more reliable infrastructure with no single point of failure. The company decided to migrate the IT infrastructure from its data centers to a public cloud and replace monolithic programs with smaller manageable software components using a microservices architecture. Not only does this mean Netflix engineers can easily change any services, which leads to faster deployments, but it also enables them to track the performance of each service well and quickly troubleshoot any issues.

Another instance like Netflix is Education Horizons which designed a student information platform for small schools named Zunia (the student information platform), using AWS, which benefits from strong security isolation between the containers. AWS also provides the latest security updates and enables granular access permissions for every container. Zunia has been designed and built to tap into the scalability, elasticity, resiliency, and flexibility of the cloud.

Challenges: Managing and governing development workflow

Cloud native applications are built on many layers, and their development process is spread across multiple stages, which makes it difficult and complex to manage and govern the development workflow. There also is a large number of tools and technologies that function as enablers for cloud-native application development. The unique value proposition of cloud-native architectures also brings along many layers of complexity, such as the source code, third-party code, dependencies, software artifacts (observations/inferences) from the build process, and Infrastructure as Code, which results in the deployment of live infrastructure, and the cloud resources provisioning along with clusters. Therefore, one of the main challenges for cloud-native applications is security.

Based on organization size, large enterprises segment to hold a larger share in the cloud native applications market growth during the forecast period

Large enterprises have been early adopters of cloud native applications and associated professional and/or managed services. Large enterprises have increasingly started using cloud-based systems over traditional on-premises solutions. These enterprises have several departments or teams engaged with different operations. Large enterprises deploy cloud native solutions due to higher flexibility, scalability, and low maintenance costs. As businesses store information and data in the cloud, the requirement for security solutions is also increasing. Large enterprises have emphasized on the importance of innovating their customer experience quickly to see the value of adopting cloud-native development model. Over half of the new applications to be developed in 2023 will be cloud native. Among current adopters of the model, 53% of applications are cloud-native. Among enterprise applications, data analytics, business intelligence, and any application that uses a database are most commonly designed and built with the cloud-native model.

Based on vertical, the BFSI segment to hold the largest market share in the cloud native applications market during the forecast period

Cloud technology is increasingly being used by banking, financial services and insurance institutions to store data and applications. Cloud technology providers offer products and services that provide multiplied revenue generation, customer insights, with reduced costs. The deployment of cloud computing models provides control to financial institutions on how they pay for the technology deployed. Cloud deployment provides increased scalability, and organizations can respond more quickly to market shifts. The overall costs are reduced as the organizations do not need to pay for on-premises infrastructure costs. The COVID-19 outbreak has further accelerated data movement to the cloud environment. There is an increasing need for cybersecurity solutions and services in the BFSI vertical to fight against the growing number of physical and cyberattacks on critical infrastructures that are taking place due to the increasing adoption of BYOD and Work from Home (WFH) trends. Financial institutions need to be compliant with regulations such as the PIPEDA. This has led to the growing adoption of CNAPP and associated services. Financial institutes are always early adopters of advanced technologies. CNAPP is one of the essential security tools developed to secure deployed cloud resources and has significant applications in the BFSI vertical.

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North America to hold the largest market share during the forecast period

North America is expected to be among the largest contributors to the global cloud native applications market in terms of market share. It is one of the most advanced regions regarding cloud and edge computing technology adoption and infrastructure, besides several other advanced technologies. The region has quite well experienced increasing digitalization and cloud technology adoption. IT spending on system infrastructure is drastically shifting upwards from traditional solutions to the cloud, with both public and private deployment types. Organizations are rapidly using cloud services for new initiatives or to replace existing systems. The regional presence of key industry players offering cloud native applications drives the market growth in North America.

Nearly 35% of the market’s growth will originate from North America during the forecast period, per studies/surveys from expert opinions. The US is the key market for the cloud native applications market in North America. Market growth in this region will be faster than the growth of the market in Europe. Additionally, the region’s growth is anticipated due to the presence of top vendors in the region, including Microsoft, AWS, IBM, VMware, and Google. According to Forrester, 14% of the professional developers in Canada significantly use containers on the public cloud, and 16% use a serverless architecture. Increased adoption across the region with the proliferation of containerized environments such as Kubernetes attracts impressive investment directed towards this market, and Kubernetes has become the container orchestration platform of choice among IT teams across the region. The countries analyzed in the North American region include the US and Canada.

Key Players

Several global as well as startup players in the cloud native applications market have been profiled in the report. Those include Amazon.com, Inc. (Amazon, US), Google LLC (Google, US), International Business Machines Corporation (IBM, US), Infosys Technologies Private Limited (Infosys, India), Larsen & Toubro Infotech (LTIMindtree, India), Microsoft Corporation (Microsoft, US), Oracle Corporation (Oracle, US), Red Hat (US), SAP SE (SAP, Germany), VMware (US), Alibaba Cloud (Singapore), Apexon (US), Bacancy Technology (India), Citrix Systems, Inc. (Citrix, US), Harness (US), Cognizant Technology Solutions Corp (Cognizant, US), Ekco (Ireland), Huawei Technologies Co. Ltd. (Huawei, China), R Systems (US), Scality (US), Sciencesoft (US).

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Scope of the Report

This research report categorizes the cloud native applications market based on solution, deployment mode, organization size, vertical, and region.

Based on component, the cloud native applications market has been segmented as follows:

• Platforms
• Services

Based on deployment type, the cloud native applications market has been segmented as follows

• Public cloud
• Private cloud

Based on organization size, the cloud native applications market has been segmented as follows

• Small and Medium-sized Enterprises (SMEs)
• Large Enterprises

Based on vertical, the cloud native applications market has been segmented as follows

• BFSI
• IT & telecommunication
• Government & public sector
• Retail & eCommerce
• Healthcare & life sciences
• Manufacturing
• Other verticals (education, media & entertainment, and energy & utilities)

Based on region, the cloud native applications market has been segmented as follows:

• North America
  • US
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Rest of Europe
• Asia Pacific
  • China
  • Japan
  • India
  • Rest of Asia Pacific
• Middle East and Africa
  • KSA (Kingdom of Saudi Arabia)
  • United Arab Emirates (UAE)
  • Rest of Middle East and Africa
• Latin America
  • Brazil
  • Mexico
  • Rest of Latin America

Recent Developments

• In May 2022, IBM SaaS (on IBM Cloud) signed an agreement with AWS (Amazon), that will provide clients with access to IBM software that runs cloud-native on AWS. This collaboration will provide clients with quick and easy access to IBM software that spans automation, data and AI, security and sustainability capabilities, which is built on Red Hat OpenShift Service on AWS (ROSA – Red Hat OpenShift service) and runs cloud-native on AWS. The mutually agreed companies are also committing to a wide range of joint investments for hassle-free clients’ experience to consume IBM software on AWS, including integrated go-to-market (GTM) activities/strategies across sales and marketing, channel incentives, developer enablement and training, and solution development. This is targeted across key verticals such as Oil and Gas, Travel and Transportation.
• In April 2022, developers and IT operations professionals at Google built containers and APIs on Google Cloud in order to create modern, cloud-first and cloud-native applications. Products and services include Google Cloud on application development, containers, Kubernetes, DevOps, serverless and open source as well.
• In February 2022, IBM acquired Neudesic, which provides services consultancy specializing primarily in the Microsoft Azure platform, along with getting skills in multi-cloud. The ability to accelerate digital transformation through application development, modernization and data capabilities, powered by the cloud, plays a significant role in achieving the company’s operational goals. Yet enterprises are facing an acute cloud-native skills shortage, owing to which IBM is strictly looking at and enhancing its cloud-native capability and capacity significantly.

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