The cloud software market has expanded rapidly in recent years, offering enterprises a wider range of options for AI and data transformation strategies, according to new research from global AI-focused technology advisory firm Information Services Group (ISG).
By 2027, over 90% of enterprises are expected to deploy hybrid cloud and multicloud architectures to manage cloud-native workloads. This strategic shift aims to enhance operational agility, resilience, and compliance while enabling organizations to respond faster to evolving business demands.
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The ISG Buyers Guides for Cloud Platforms, produced by ISG Software Research, evaluates 30 software providers and their products to support cloud operations. The study shows that cloud computing has moved from a niche service in the early 2000s primarily public cloud offerings into a central component of enterprise IT strategy. Today, organizations can select from public, private, hybrid, and sovereign cloud platforms based on operational, financial, and regulatory needs. Many enterprises now favor hybrid solutions to balance the strengths of multiple platform types.
“By the end of 2027, more than 90 percent of enterprises will be using hybrid cloud and multicloud architectures to distribute cloud-native workloads,” said Jeff Orr, director, ISG Software Research. “This approach will allow them to maximize their operational agility, resilience and compliance.”
The research highlights how each cloud type addresses unique enterprise challenges. Public clouds offer scalable and cost-effective computing resources, while private clouds meet specific security requirements. Sovereign clouds provide localized infrastructure for organizations needing compliance with stringent data privacy laws, particularly in Europe. Hybrid clouds, combining public scalability with private security, are emerging as the preferred choice, offering seamless integration and dynamic workload management while reducing vendor lock-in.
ISG also reports that cloud providers are increasingly leveraging AI and machine learning to enhance efficiency, resource management, and collaboration. Innovations like AI/ML-as-a-service allow enterprises to train advanced models without managing complex infrastructure. Generative AI helps IT teams create documentation for cloud integration, and within two years, Agentic AI could automate administrative cloud management tasks.
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For its 2025 Buyers Guides, ISG assessed providers across five categories: Cloud, Hybrid Cloud, Private Cloud, Public Cloud, and Sovereign Cloud Platforms. Microsoft emerged as the top Overall Leader across all categories, closely followed by Google Cloud, Oracle, and AWS, with multiple providers rated as Exemplary or Innovative in different categories.
“Companies developing cloud strategies should assess and orchestrate their unique requirements and the potential implications of operating across cloud platforms,” said Mark Smith, partner and chief software analyst, ISG Software Research. “This research provides the ratings and insights to evaluate cloud platforms and products in terms of computing, functions, networking and storage…leading to more informed purchase decisions.”
The ISG Buyers Guides for Cloud Platforms represent over a year of independent research, designed to help enterprises optimize software investments without vendor influence.
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