The biggest contributor to this surge is Infrastructure as a Service (IaaS), expected to grow by 25.6% to reach A$7.2 billion. This growth is driven by enterprises ramping up investment in scalable infrastructure to support AI workloads.
Platform as a Service (PaaS) is also seeing significant growth, forecast to jump 23.8% to A$4.3 billion. Cloud-native development is becoming the norm, and Australian firms are increasingly embracing microservices, containerization, and continuous integration pipelines
📊 Forecast Summary
| Segment | 2024 (A$ Billion) | 2025 (A$ Billion) | % Growth |
|---|---|---|---|
| IaaS | 5.73 | 7.2 | 25.6% |
| PaaS | 3.47 | 4.3 | 23.8% |
| SaaS | 7.8 | 9.2 | 17.9% |
| Cloud Management & Security | 2.9 | 3.4 | 17.2% |
SaaS Spending
Australia’s appetite for cloud continues to grow, with Software as a Service (SaaS) poised to remain the dominant force in the market.
In 2025, SaaS spending is forecast to hit nearly A$13 billion—a sharp 15.5% increase over the previous year, according to fresh insights from analyst firm Gartner.
This surge isn’t just a case of organisations buying more tools; it reflects a deeper trend. Companies are embracing cloud-based apps not just for their scalability, but for their evolving intelligence. The integration of generative AI (GenAI) into everyday software is proving too compelling to ignore.
“Public cloud services continue to be a critical driver of innovation across Australian organisations this year,” said Adrian Wong, director analyst at Gartner.
But with innovation comes complexity. As companies double down on AI, many are grappling with how to scale these initiatives effectively—and economically.
“To deliver value, CIOs need a sharper cloud strategy, one that prioritises return-on-investment but also keeps pace with rapid technology shifts,” Wong added.
Gartner’s latest global survey, which tapped the minds of more than 3,000 CIOs and tech leaders—including 109 from Australia and New Zealand—underscores the cloud’s central role in digital transformation.
A resounding 83% of ANZ respondents cited cloud platforms as one of their top three tech investments for 2025, trailing only cyber security and data analytics.
Australia’s cloud journey has clearly matured. Gone are the days of tentative pilots and sandbox trials. From nimble startups to heavyweight enterprises and government agencies, the focus has shifted to scale, modernisation, and data sovereignty.
Take MongoDB, for example. The database giant recently opened a new office in Sydney, cementing its R&D presence and setting sights on helping the region shake off its legacy IT baggage.
Meanwhile, the federal government inked a three-year, whole-of-government agreement with Amazon Web Services (AWS), making cloud tools more accessible across all tiers of public administration.
The utilities sector, too, is riding the wave. From managing rooftop solar to preparing the grid for electric vehicles, AI is playing a growing role in shaping smarter infrastructure. And at Snowflake’s World Tour stop in Sydney, the buzz was all about reducing data complexity and ramping up AI adoption.
Despite the progress, cloud is not without its growing pains. Managing costs, securing workloads, and plugging persistent skills gaps continue to challenge organisations.
And while cloud spending in Australia is expected to reach A$23.2 billion in 2024, many companies are still struggling to get a handle on their cloud bills—something CFOs are paying increasingly close attention to.
Hardeep Singh, principal analyst at Gartner, believes that several powerful currents are pushing cloud adoption forward.
“Legacy modernisation, cost optimisation and the adoption of AI-driven workloads continue to drive strong demand for cloud services,” says Singh
He also warned that the global backdrop of economic volatility—from trade tensions to shifting tariffs—could add uncertainty to the forecast.
“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,”
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.
“This may lead to cautious spending by providers and delays in datacentre expansions, prompting marginal adjustments to cloud spending projections. Despite this, the cloud market’s underlying momentum remains intact.” Singh added.
