New Zealand’s cloud adoption: Progress, gaps, and the path forward
Cloud computing is rapidly transforming New Zealand’s digital landscape, with public cloud spending set to nearly double by 2028 and the technology now underpinning almost 6% of the nation’s GDP.
That’s according to Spark’s State of Cloud 2025 report which estimates that public cloud spending is set to grow from NZ$5 billion in 2024 to NZ$9.6 billion by 2028, representing an 18% compound annual growth rate. This expansion is expected to generate over NZ$22 billion in new revenue over the next four years. In 2024 alone, public cloud contributed an estimated NZ$24.3 billion to the economy, equivalent to nearly 6% of the country’s annual GDP.
That will be music to the ears of Microsoft and AWS, which have invested in developing local public cloud regions and ramped up tech skills training efforts to drive cloud adoption. Yet, despite this surge in investment and recognition of cloud’s strategic value, the report reveals a persistent capability gap that threatens to slow the country’s digital progress.
Mark Beder, Spark Customer Director for Enterprise and Government, emphasises the importance of governance in enhancing business capability. He urges executive leadership to collaborate with IT departments to strategically approach cloud and AI investments.
“You can’t unlock the value of AI, automation, or advanced analytics if you’re building on outdated cloud infrastructure. Yet, over half of IT leaders say business decision-makers don’t fully understand how critical cloud capability is to enabling these technologies,” says Mark Beder, Spark Customer Director for Enterprise and Government.
“If cloud continues to be treated as just an IT issue, New Zealand businesses risk being unable to scale innovation and realise ROI from advanced technologies. It’s time to bring cloud into the boardroom and recognise it as the next competitive edge for businesses.
Recognition vs. readiness
While 70% of New Zealand businesses acknowledge that cloud technology is critical to their future strategy and growth, only 34% report having the well-established processes, infrastructure, and technical maturity needed to unlock its full potential. This disconnect highlights a widening capability gap: although organisations are investing in cloud, many are not yet positioned to fully leverage its benefits, particularly in relation to emerging technologies like artificial intelligence (AI).
Spark’s Cloud Maturity Framework, introduced in the report, benchmarks organisations across five stages, from basic awareness to full digital transformation. The data is stark:
Only 14% of businesses have reached the highest, “transformational” stage, where cloud enables significant business innovation and agility.
The majority remain in the early phases, with 28% at the “active” stage—experimenting with cloud but not yet optimising its benefits.
Among small and medium-sized enterprises (SMEs), about half (52%) have not progressed beyond the second stage.
By contrast, only 23% of large enterprises have reached the transformational stage.
Source: Spark State of Cloud 2025 report
Barriers: Security, skills, and cost
The report identifies three main barriers to cloud maturity:
Security concerns: 43% of businesses cite security as their top challenge, especially those still experimenting with or optimising their cloud strategies.
Skills shortage: 36% of IT decision-makers report a lack of expertise or qualified staff as a significant hurdle, contributing to hesitancy in adopting and managing cloud solutions.
Cost uncertainty: Financial investment and ongoing costs remain a concern, particularly for large enterprises and those in advanced stages of cloud adoption, where cost optimisation becomes paramount.
A critical finding is that 66% of New Zealand businesses still view cloud deployment as primarily an IT responsibility, rather than a whole-of-business priority. This siloed approach limits the strategic benefits of cloud adoption. Only 19% of organisations place high importance on cloud infrastructure in their AI adoption strategies, despite most planning to invest in AI. Over half of IT leaders say that business decision-makers do not fully understand how critical cloud capability is to enabling advanced technologies like AI, automation, and analytics.
Source: Spark State of Cloud 2025 report
Hybrid adoption more common
Public cloud is now the most common model, used by 55% of New Zealand businesses, slightly ahead of private cloud (48%). On-premise technology remains prevalent, especially among SMEs, reflecting ongoing concerns about security, control, and legacy systems. As organisations advance in their cloud journey, hybrid solutions that combine multiple cloud types are becoming more common.
To bridge the capability gap and fully realise the benefits of cloud, the report recommends:
Elevating cloud to a boardroom issue: Executive leadership must work closely with IT to treat cloud as a strategic asset, not just an operational tool.
Investing in skills and governance: Upskilling staff and improving governance frameworks will help organisations move up the maturity scale and better support AI and other emerging technologies.
Focusing on security and cost management: Robust cybersecurity measures and clearer visibility of whole-of-life cloud costs are essential for building confidence and optimising investments.
Leveraging assessment tools: Spark is introducing a Cloud Maturity self-assessment tool to help businesses identify gaps and plan practical solutions.
The report is based on a survey of 400 IT decision-makers. This is the third State of New Zealand Cloud Transformation report conducted by Spark subsidiary CCL and the first since CCL integrated into Spark.
