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Posts from the ‘Amazon Web Services’ Category

Key Take-Aways From The 2015 Pacific Crest SaaS Survey

  • Cloud Computing M&A40% of SaaS companies are using Amazon Web Services (AWS) to deliver their apps today.
  • Median subscription gross margins for SaaS companies in 2015 are 78%.
  • Overall, SaaS companies are projecting median revenue growth of 46% in 2015.
  • Channel sales and inside sales strategies delivered the highest revenue growth rates in 2014.
  • Companies in the $5M – $7.5M range achieved 70% revenue growth in 2014, surpassing the median 36% growth rate last year.

These and many other insights are from the 2015 Pacific Crest SaaS Survey published by David Skok of Matrix Partners in collaboration with Pacific Crest Securities. You can download a free copy of Part I of the study here (PDF, opt-in, 72 pp). 305 SaaS companies were interviewed, 31% from international locations and 69% from North America.  David Skok and Pacific Crest Securities will publish Part 2 of the results in the near future. SaaS Metrics 2.0 – Detailed Definitions provides a useful reference for many of the SaaS metrics mentioned in the study.

This year’s survey attracted an eclectic base of respondents, with median revenues of $4M a year, with 133 companies reporting less than $5M, and 57 over $25M. Annual Contract Value (ACV) across all respondents is $21K, with 17% of respondents reporting ACVs over $100K.  Please see pages 3 & 4 of the study for a description of the methodology. Key take-aways from the study include the following:

  • SaaS GAAP revenue growth is accelerating in 2014 and is projected to increase further in 2015 from 44% to 46%. Median revenue growth in 2014 for all survey respondents was 44%, with the aggregate projected growth for 2015 reaching 46%. When SaaS companies with less than $2.5M in revenues are excluded, median GAAP growth was 35% in 2014 and is expected to reach that same level in 2015.

grow SaaS Revenue


  • SaaS companies with mixed customer strategies are growing at 57% a year.  Excluding respondent companies with less than $2.5M in revenues, a mixed customer strategy dominates all others. Concentrating on enterprises and small & medium businesses (SMBs) both drove 33% revenue growth of respondent companies this year.

median growth rate as a function of customer


  • 40% of SaaS companies are using Amazon Web Services (AWS) to deliver their apps today. AWS is projected to increase to 44% three years from now, with Microsoft Azure increasing from 3% today to 6% in 3 years.

SaaS Delivered


  • 41% of all SaaS companies surveyed rely primarily on field sales.  Factoring out the companies with less than $2.5M in revenue, field sales accounts for 32%.

primary mode of distribution


  • Field sales dominates as the most effective sales strategy when median deal sizes are $50K or more. In contrast, inside sales dominates $5K to $15K deal sizes, and the Internet dominates deal sizes less than $1K.  The following graphic provides insights into the primary mode of sales by median initial contract size.

mode by initial contract size


  • 16% of new Average Contract Value (ACV) sales is from upsells, with the largest companies being the most effective at this selling strategy. One of the strongest catalysts of a SaaS companies’ growth is the ability to upsell customers to a higher ACV, generating significantly greater gross margin in the process. SaaS companies with revenues between $40M to $75M increase their ACV by 32% using upsells. Larger SaaS companies with over $75M in sales generate 28% additional ACV with upsell strategies.

ACV Value


  • The highest growth SaaS companies are relying on upsells to fuel higher ACV.  There is a significant difference between the highest and lowest growth SaaS companies when it comes to upsell expertise and execution.  The following graphic provides an overview by 2014 GAAP revenue category of percent of ACV attributable to upsells.

fast upsell


  • 60% are driving revenues with “Try Before You Buy” strategies, with 30% generating the majority of their revenues using this approach.  On contrast, only 30% of companies generate revenues and ACV from freemium.


10 Ways Big Data Is Revolutionizing Supply Chain Management

supply chain managementBottom line: Big data is providing supplier networks with greater data accuracy, clarity, and insights, leading to more contextual intelligence shared across supply chains.

Forward-thinking manufacturers are orchestrating 80% or more of their supplier network activity outside their four walls, using big data and cloud-based technologies to get beyond the constraints of legacy Enterprise Resource Planning (ERP) and Supply Chain Management (SCM) systems. For manufacturers whose business models are based on rapid product lifecycles and speed, legacy ERP systems are a bottleneck.  Designed for delivering order, shipment and transactional data, these systems aren’t capable of scaling to meet the challenges supply chains face today.

Choosing to compete on accuracy, speed and quality forces supplier networks to get to a level of contextual intelligence not possible with legacy ERP and SCM systems. While many companies today haven’t yet adopted big data into their supply chain operations, these ten factors taken together will be the catalyst that get many moving on their journey.

The ten ways big data is revolutionizing supply chain management include:

Figure 1 SCM Data Volume Velocity Variety

  • Enabling more complex supplier networks that focus on knowledge sharing and collaboration as the value-add over just completing transactions.  Big data is revolutionizing how supplier networks form, grow, proliferate into new markets and mature over time. Transactions aren’t the only goal, creating knowledge-sharing networks is, based on the insights gained from big data analytics. The following graphic from Business Ecosystems Come Of Age (Deloitte University Press) (free, no opt-in) illustrates the progression of supply chains from networks or webs, where knowledge sharing becomes a priority.

figure 1 big data scm

  • Big data and advanced analytics are being integrated into optimization tools, demand forecasting, integrated business planning and supplier collaboration & risk analytics at a quickening pace. These are the top four supply chain capabilities that Delotte found are currently in use form their recent study, Supply Chain Talent of the Future Findings from the 3rd Annual Supply Chain Survey (free, no opt-in). Control tower analytics and visualization are also on the roadmaps of supply chain teams currently running big data pilots.

Figure 2 use of supply chain capabilities

  • 64% of supply chain executives consider big data analytics a disruptive and important technology, setting the foundation for long-term change management in their organizations.  SCM World’s latest Chief Supply Chain Officer Report provides a prioritization of the most disruptive technologies for supply chains as defined by the organizations’ members.  The following graphic from the report provides insights into how senior supply chain executives are prioritizing big data analytics over other technologies.

disruptive tech

  • Using geoanalytics based on big data to merge and optimize delivery networks.  The Boston Consulting Group provides insights into how big data is being put to use in supply chain management in the article Making Big Data Work: Supply Chain Management (free, opt-in). One of the examples provided is how the merger of two delivery networks was orchestrated and optimized using geoanalytics. The following graphic is from the article. Combining geoanalytics and big data sets could drastically reduce cable TV tech wait times and driving up service accuracy, fixing one of the most well-known service challenges of companies in that business.

Figure 4 geoanalytics

figure 6 big data


figure 7 big data

  • Greater contextual intelligence of how supply chain tactics, strategies and operations are influencing financial objectives.  Supply chain visibility often refers to being able to see multiple supplier layers deep into a supply network.  It’s been my experience that being able to track financial outcomes of supply chain decisions back to financial objectives is attainable, and with big data app integration to financial systems, very effective in industries with rapid inventory turns. Source: Turn Big Data Into Big Visibility.

figure 8 traceability

  • Traceability and recalls are by nature data-intensive, making big data’s contribution potentially significant. Big data has the potential to provide improved traceability performance and reduce the thousands of hours lost just trying to access, integrate and manage product databases that provide data on where products are in the field needing to be recalled or retrofitted.
  • Increasing supplier quality from supplier audit to inbound inspection and final assembly with big data. IBM has developed a quality early-warning system that detects and then defines a prioritization framework that isolates quality problem faster than more traditional methods, including Statistical Process Control (SPC). The early-warning system is deployed upstream of suppliers and extends out to products in the field.

Roundup Of Free Cloud Computing Online Courses

career-start1One of the best ways to capitalize on cloud computing’s growth from a career standpoint is to constantly be learning and gaining new knowledge.

Being able to apply the technological aspects of cloud computing to business problems quickly, combined with constantly developing expertise on how to manage legacy systems and cloud platforms is a very valuable, marketable skill.

Many manufacturers I meet with are grappling with the high maintenance costs and time latency of legacy systems when their business models are accelerating faster than ever.   Helping these enterprises bridge the gap between legacy systems and the urgent need for more accurate customer, supplier, pricing, and quality data creates many opportunities for career growth.

Free Cloud Computing Courses

The number and quality of free online cloud computing courses continues to grow, and lately the prices of fee-based online programs are dropping.  Not across the board, but clearly the competition of online education programs is changing in favor of the student.

The table below profiles free online cloud computing certificate and degree programs.  You can download a PDF of the full roundup of cloud computing courses here that also includes fee-based online programs.  Please click on the graphic to expand it for easier reading.

Roundup of cloud computing courses

Key take-aways from the roundup of cloud computing courses include the following:

  • edX & UC BerkeleyX are offering a series of courses on Engineering Software as a Service.  The first of two sessions offered by edX and UC Berkeley concentrate on engineering solid high performance cloud applications using agile techniques to design then code a Software as a Service (SaaS) application using Ruby on Rails.  The second session concentrates on deploying the application in the cloud and enhancing its performance using JavaScript.
  • Coursera and Vanderbilt University are offering Programming Cloud Services for Android Handheld Systems.  This class signifies a broader trend by Massive Open Online Courses (MOOC) where cloud computing and mobility are often being included in the same course.  This course includes instruction on how to apply patterns and frameworks to develop scalable and secure cloud services.  Included is coverage of mobile and cloud communication, data persistence, concurrency and synchronization, synchronous and asynchronous event handling, and security. The bulk of the examples are in Java using the Spring Framework and Jetty middleware platform. The examples will be run on Google App Engine and Amazon EC2.  This course is free. 
  • Google Developer Academy – Self-based e-learning site that has an excellent overview of Google AppEngine, Python App Engine and Google+ APIs.
  • Microsoft Research Windows Azure for Research Training – An innovative training program aimed at academicians and researchers, this is going to be an excellent learning platform regarding the Microsoft Windows Azure Platform.  Best of all, the course sessions and eventual online content are free.
  • MIT OpenCourseWare (OCW) – One of the most comprehensive collections of courseware available globally today, OCW  is a web-based publication of virtually all MIT course content. OCW is open and available to the world and is a permanent MIT activity.

Top 12 Sites For Free Cloud Computing & Enterprise Software Research

campusOne of the most common questions I get from students is where they can find free cloud computing and enterprise software research.

Few if any of my students work for companies who have subscriptions with the top analyst firms however.  A small group of students are working on a start-up on the side and want to absorb as much market data as they can.

Many of my former students are also in IT management roles, and when they become interested in a specific cloud computing or enterprise topic over time, they write me and ask if I have any data on their subject of interest.  I keep the following list updated from them too.   To serve all these students I’ve been adding to the list shown below for a number of years. None of these companies are current or past clients and I hold no equity positions in any of them.

The requests are so prevalent in global competitive strategy courses I distribute this list at the beginning of the semester with the following disclaimers.

  • Many of the cloud computing and enterprise software companies pay to have white papers written and research done.  Writing white papers and doing research for an enterprise software vendor client is a very lucrative business for many industry analyst firms.  Ethical industry analysts will often insist that a disclaimer be included in the white paper and on the website stating that they and their firms were hired to write the paper or do the research and publish the report.
  • The reports are intellectual property of the firms publishing them.  Enterprise software vendors often pay tens of thousands of dollars at a minimum for reprint rights and the right to provide them on their websites.  I advise my students to seek out the copyright and quote policies of the research firm of interest if they plan on re-using the graphics in any published materials or in their blog posts.  One for example, the Gartner Copyright and Quote Policy is shown here.
  • Pay attention to the methodologies used in each report and realize they change over time.  This is especially the case with the  Gartner Magic Quadrant and MarketScopes. Gartner has been very active this year in refining the Magic Quadrant methodology for example.

The following are the list of cloud computing and enterprise software vendor sites that offer free downloads of cloud computing and enterprise software research:

  • Amazon Web Services – Amazon has purchased re-print rights to the Gartner Magic Quadrant for Cloud Infrastructure as a Service written by Lydia Leong, Douglas Toombs, Bob Gill, Gregor Petri, Tiny Haynes published on August, 19, 2013 in addition to the latest reports from Forrester on enterprise public cloud platforms and enterprise cloud databases. Link:
  • BMC Software – Many free reports from Gartner, Forrester, The 451 Group and other research firms covering advanced performance analytics (APA), cloud computing, IT Service Management and long-term technology trends. Link:
  • Computer Associates – An extensive collection of cloud computing and enterprise software research organized into the following categories: cloud; data management; energy and sustainability management; IT automation; IT security; IT service management; mainframe; project and portfolio management; service assurance and virtual organizations.  CA requires opt-in on the latest research as they use this site as part of their lead generation strategy.  Link:
  • Cisco Systems –  Data Center and Virtualization; includes the latest Current Analysis, Forrester, Gartner, IDC, Lippis and Yankee Group research reports covering Big Data, blade servers, cloud computing, Hadoop, unified data centers and many other topics.  Be sure to click across the Computing, Network, Orchestration/Automation,  and Network Services tabs to find additional research:   Link:
  • Hewlett-Packard – HP has invested primarily in networking-related analyst research including the latest studies and market frameworks from Forrester, Gartner, IDC and Infonetics Research.  Link:
  • Intel – Organized around the topic of designing a data center for the cloud, Intel is providing a series of research studies, reports, white papers and videos that provide insights into virtualization, networking, mobility and Intel-based servers running cloud architectures.  Link:
  • Microsoft – Balancing the need to support their enterprise applications today and create demand for cloud-based initiatives now and in the future, Microsoft’s series of analyst reports reflect their evolving business model.  Microsoft has licensed the latest research from Enterprise Strategy Group (ESDG), Forrester, Gartner, IDC, Ovum, Yankee Group and others listed on this site. Link:
  • Oracle – The most comprehensive collection of industry analyst research online for any enterprise software vendor, Oracle has hundreds of research reports available for viewing under their reprint licenses for free, and also for download.  The reports are organized into corporate, infrastructure, systems, services, solutions, industries, enterprise applications and regions.     Link:
  • Progress Software – Extensive collection of research from Bloor, Forrester, Gartner, IDC, Tabb Group, Ovum and other research firms are available for download from this site. Link:
  • SAS – The most extensive and well-organized online collection of analyst research on analytics and business intelligence (BI) available, SAS makes research available from fifteen analyst firms across six industries on this area of their website.  You can find the SAS Analyst Viewpoints section of their website here:
  • Symantec – Provides downloadable analyst reports in the areas of risk and compliance, endpoint security and management, information and identity protection, messaging security, backup and archiving, storage and availability management, services and emerging trends.  ESG, Info-Tech Research Group, Forrester, Gartner and IDC reports are on this page for download. Link:
  • Teradata – Extensive collection of industry analysis and research organized into the sections of Active Data Warehousing, Active Enterprise Intelligence, Enterprise Data Warehousing, Teradata Analytical Ecosystem and Teradata Integration Analytics.  The latest market frameworks from Gartner, Forrester, IDC and other research firms are available for download.  Link:

Coursera, edX Offer Free Online Courses As Cloud Computing Learning Options Proliferate

StanfordThe value and variety of online cloud computing programs being offered by leading colleges and universities is proliferating.

Focusing on the learning needs of IT professionals who need to apply cloud technologies to solve complex business problems, many of these programs and courses sell out before classes begin. This is because CIOs’ career paths are increasingly defined by how well they apply cloud technologies to the unique challenges and problems their businesses face. For CIOs and other members of senior management, getting a solid education on cloud computing’s business benefits is essential for managing effectively today, increasing their long-term marketability and career growth.

These programs are designed for C-level executives and senior managers to get up to speed quickly, often including guest CEOs of prominent software companies as part of the curriculum.  Stanford’s course offered this fall online and on campus has five different CEO guest speakers including Aaron Levie, CEO of for example.  These programs have an entirely different set of learning objectives versus certifications.  For an excellent analysis of cloud certifications please see David Linthicum’s recent post Are you on the right cloud computing career path?   Also excluded are vendor-sponsored certification programs as the intent of many of these is to promote a very specific view of cloud computing that aligns with their product and service strategies.

Here are key take-aways from following this area:

  •  Georgia Institute of Technology is partnering with Coursera, offering Health Informatics in the Cloud, beginning on September 16th for free.  Coursera is an education company that partners with many of the worlds’ leading colleges and universities to offer free online courses to anyone, anywhere.  They have partnered with 62 universities in 16 countries and offer over 300 courses as of today.
  • University of California, Berkeley is partnering with EdX offering Software as a Service (CS169.2X) beginning August 13th for free.  MIT and Harvard partnered to create EdX, a non-profit organization that is committed to bringing the best of higher education to students around the world.  EdX offers MOOCs (massive open online courses) in addition to interactive online courses in the subject areas of law, history, science, engineering, business, social sciences, computer science, public health, and artificial intelligence (AI).
  • Stanford University’s CS309A looks like one of the best being offered this fall, with five different CEO guest speakers including Hamish Brewer, JDA Software; Godfrey Sulliva, Splunk; Bob Beardon, Horton Works; and Aaron Levie,  Dr. Timothy Chou, former president of Oracle OnDemand and Lecturer at Stanford University for over three decades is teaching the course.
  • The following is a comparison of the cloud computing courses and programs designed for senior management starting this fall.  Those entries in green are the free courses that take just minutes to enroll in.  Please click on the image to expand it for easier reading.

Cloud Computing

Amazon Web Services Leading Cloud Infrastructure as a Service App Development

IaaS Magic QuadrantEvangelizing development on any cloud computing or enterprise platform is challenging, costly and takes a unique skill set that can educate, persuade, sell and serve developers at the same time.

The companies who excel at this exude technical prowess and as a result earn and keep trust.  For Cloud Infrastructure as a Service (IaaS) platform providers, getting developers, both at partner companies and at enterprise customers to build applications, is a critical catalyst for future growth.

Assessing Cloud Infrastructure as a Service Providers with Inquiry Analytics  

Using the Magic Quadrant for Cloud Infrastructure as a Service, 2012 published October 18, 2012 as the baseline and shown above from Rueven Cohen’s excellent post last year, the five leaders were compared using the Inquiry Analytics Statistics: Topic and Vendor Mind Share for Software, 4Q12 published March 13th of this year.  Analyzing the five leaders in the Magic Quadrant using Inquiry Analytics shows that Amazon Web Services (AWS) was 57.1% of inquiry share worldwide for application development  during the 4th quarter of 2012.

From 4th quarter 2011 to 4th quarter 2012, Amazon Web Services showed just over 10% inquiry gain against the other vendors listed as leaders in the quadrant.  Only five vendors can be compared at once using the Gartner Inquiry Analytics tool so the leaders were included in the comparison first.

cloud IaaS

A second pass through the Inquiry Analytics was done comparing Amazon Web Services to the other vendors in the quadrant.  AWS had 63.6% of inquiries in the application development category during the 4th quarter of 2012 compared to non-leader vendors in the quadrant who were listed in the Inquiry Analytics database.  It was surprising to find that a few of the vendors listed in the Cloud IaaS Magic Quadrant don’t have data available in the Inquiry Analytics Statistics: Topic and Vendor Mind Share for Software, 4Q12 indicating inquiries.  During this pass, Rackspace share of inquiries between the 4th quarter of 2011 to the 4th quarter of 2012 declined just over 5% and Dell declines approximately 2%.

Bottom line: The land grab for developers is accelerating on IaaS and will be a major factor in who establishes a long-term cloud platform for years to come.

Microsoft’s Cloud Computing Strategy and Roadmap Evident at Convergence 2013

cloud-multi-tenancyKirill Tatarinov’s keynote this morning at Microsoft’s Convergence 2013 marks a subtle, yet very significant shift in how this technology leader is marketing itself to partners and the outside world.  They are humanizing their marketing, messaging and products.

Gone is the Spock-like precision of presentations packed with roadmaps, mind-numbing metrics and intricate feature analysis.  The Nick Brophy Band made the keynote complete by delivering excellent sets.

Microsoft is learning that telling a good story trumps terabytes of metrics. They delivered a strong keynote today starting out showing how attendees reached out to the local community and helped Habitat for Humanity.  Kirill then based the majority of his keynote on four customer success stories taken from the Microsoft Customer Excellence Award winners. Chobani, Shock Doctor, Revlon and Weight Watchers shared how they were able to better connect with customers and run more efficient businesses using Microsoft Dynamics.

The only aspect of these award winner’s stories that fell short was how the complexity of back office system integration was glossed over.  No mention of third party or legacy system integration was made, which could have shown how far Microsoft and its partners have progressed on this point, especially with the help of integration partners like Scribe Software.

Microsoft’s Cloud-First Strategy Playing Well With Partners

For Microsoft to succeed with Windows Dynamics and Azure, they are going to need each partner and reseller to believe in the vision of a cloud-first strategy, then translate their unique expertise into sales.  That’s going to be a challenge that Microsoft will have to deal with daily as it looks to further strengthen its partner and reseller base.  The recent Azure outage caused by an expired SSL certificate is on the minds of many partners and resellers here too.  Microsoft is promoting their Windows Azure Service Dashboard heavily here as a result.

Despite that recent outage, Microsoft’s ecosystem on Dynamics is flourishing , as is evidenced by the attendance and participation in this show.  The cloud-first strategy has infused a sense of hope and anticipation in many partners and resellers.  Walking the floor yesterday and today, nearly eight of every ten partners offered up how they are planning on the cloud without being asked about it.

Microsoft 2013 Roadmap Embracing the Cloud, Devices and Services    

Kirill Tatarinov’s keynote underscored how committed Microsoft is to becoming as cloud, devices and services company.  He cited the statistic that there are more devices connected to the Internet today than there are human beings on the planet.

Through several examples he also showed how Microsoft is moving full speed into being a devices and services business.  Microsoft Windows Azure is the foundational component to this strategy.  While Kirill did not specifically say that, it is clear from an architectural standpoint Windows Azure will be the foundational element of their devices and services strategy.  Microsoft is already competing with market leader Amazon Web Services, Google, Rackspace and many others.  For more information on the competitive landscape of this market, please see my previous post, Demystifying Cloud Vendors.

From a roadmap perspective this will also force Microsoft to support many more mobile operating systems and environments than they ever have before.  For their device and services strategy to succeed for example, they will have to support Google Android and Apple iOS device interfaces capable of integrating with SQL Server, at a minimum.

The following table showing recently announced updates to the 2013 Microsoft Product Roadmap first appeared on the Redmond Channel Partner website on march 18th.

Microsoft roadmap analysis

Source: Redmond Channel Partner Magazine  

Microsoft reports that Office365 will go to an accelerated release cycle, further capitalizing on the nature of a cloud-based architecture.  Resellers at this conference like the  Office 365 Open licensing program because it allows them to direct-bill customers for use of the suite, in addition to paying for the bundle of their services. Windows Azure-hosted versions of Dynamics NAV and Dynamics GP will arrive in mid-2013 according to the article as well.

For the cloud, device and services strategy to succeed Microsoft must also succeed in convincing enterprise accounts to migrate their applications to Windows Azure.  This is one of the most critical areas for the future of their cloud strategy in the enterprise, so expect to see customer stories and ongoing messaging on this point.

Bottom line: Microsoft is transitioning to a more humanized approach to marketing while embracing a cloud, device and services strategy. It will be the partner ecosystem that transforms that vision into a profitable reality.

Why Cloud Computing Is Slowly Winning The Trust War

Cloud computing Seeing skeptical CIOs agree to cloud-based pilots of Customer Relationship Management (CRM), Enterprise Resource Planning (ERP) and other applications is evidence of how cloud computing is slowly winning the trust war.

Further evidence can be seen from how skeptical many of these CIOs initially were, and how successful pilots led to their gradual trust.

This trust hasn’t come cheap however.

Every one of these CIOs spoken with, across a range of manufacturing companies, learned that Service Level Agreements (SLAs) aren’t sufficient to manage the areas of security, privacy and confidentiality on their own.  Cloud computing vendors have used SLAs as a means to imply security standards are met; one CIO told me he had an audit done to see if the SLA targets promised were realistic.  They weren’t and he moved on to another vendor.  That is the level of skepticism and lack of trust many CIOs initially have about the cloud today.  Add to that how much Europe doesn’t trust the cloud, and any CIO of a manufacturing or services business that has operations globally has ample reason to be skeptical about cloud computing.  The highly visible failures of Amazon, Apple, Google, Microsoft continues to fuel skepticism and distrust of cloud computing as well.

Despite these factors, cloud computing is slowing winning the trust war.  Here are the key take-aways from my conversations and visits with CIOs and their departments over the last two weeks:

  • Service Level Agreement (SLA) claims of security, privacy and confidentiality often only partially cover the unique needs of a given business – rarely all of them.  CIOs complained that the SLAs they were initially given for cloud pilots by vendors lacked any insight into their core business, how it operated, and how the cloud-based applications could contribute greater insight and intelligence.  Only after several revisions and additions of performance measurements tied to business strategies did these skeptical CIOs let the pilots go on.  Model contracts for defining privacy, for these CIOs, are also losing credibility.  These CIOs forced the issue of a highly specific privacy plan from vendors and got them.
  • For global cloud deployments, CIOs viewed the development a roadmap and plan for how to deal with transborder data flow restrictions and in-country compliance for data confidentiality, security and personal information protection as critical.  One manufacturing CIO is setting up a two-tier ERP system throughout Europe has to first define the global privacy regulations across each nation and province.  Depending on the European nation this could include defining the physical location, contents and specific configuration of every server used.  Germany has among the most intensive data protection rules and requirements, which further require intensive roadmap and plan development to stay in compliance.
  • The most skeptical CIOs run scenario tests of full data and record extractions during pilots.  This is a safeguard in case the relationship with the cloud provider goes badly, and also to make sure they can quickly get their data back and avert vendor lock-in.  As part of this many CIOs want to see proof that data deletion has worked correctly on the provider’s servers.
  • The most trustworthy cloud computing pilots quickly move beyond basic analytics including ROI to deliver expertise and knowledge specific to the clients’ business.  This is the most powerful dynamic of all in the victories cloud computing is having in the trust war.  When a cloud pilot moves beyond showing how it can automate a process – say payroll for example – and starts making contributions to the expertise and knowledge of a company, trust grows quickly.   At that point trust becomes an accelerator for cloud computing and the platform and applications become part of the IT strategy of a business.

Bottom line:  Trust is the greatest accelerator there is in cloud computing’s growing adoption, and that’s earned when cloud applications get beyond simple metrics to delivering insights and useful intelligence on secured platforms.

Thank you Cindy Jutras and Lisa Lincoln for your contributions and insights on this as well.

Additional Reading and References:

Demirkan, H., & Goul, M. (2013). Taking value-networks to the cloud services: Security services, semantics and service level agreements. Information Systems and eBusiness Management, 11(1), 51-91.

Khan, K. M., & Malluhi, Q. (2010). Establishing trust in cloud computing. IT Professional Magazine, 12(5), 20-27.

John C. Roberts, II , Wasim Al-Hamdani, Who can you trust in the cloud?: a review of security issues within cloud computing, Proceedings of the 2011 Information Security Curriculum Development Conference, p.15-19, September 30-October 01, 2011, Kennesaw, Georgia

Rodero-Merino, L., Vaquero, L. M., Caron, E., Muresan, A., & Desprez, F. (2012). Building safe PaaS clouds: A survey on security in multitenant software platforms. Computers & Security, 31(1), 96. Link:

Demystifying Cloud Vendors

cloud-computing landscapeCutting through the hype of cloud vendors starts by evaluating how ready their Cloud Services, enabling technologies and Professional Services are to serve customers today.

That’s one of the key take-aways from a recent webinar I attended titled How Cloud Computing Changes the Vendor Landscape by David Mitchell Smith, VP and Gartner Fellow last week.  The slides are available for download here (Free for download after Gartner registration if you are not a Gartner client).

What made this webinar unique and worth mentioning is the framework that was presented for evaluating vendors.  Beginning with the well-known Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS) structure, Gartner added in a Business and Information Systems layer that includes brokerages, management and security.  This is the layer where Gartner says they are seeing enterprise clients most concentrate on emerging technologies.

The cloud vendor landscape is defined by Cloud Services, Professional Services for Consumption, Enabling Technologies and Professional Services for building and running applications.  Green designates a vendor area of emphasis, yellow are those areas serviced by partners and white areas are not addressed by the vendor’s strategy at all.

Using this framework, nine different companies were analyzed including Amazon, Google, HP, IBM, Microsoft, Oracle,, SAP and VMWare.

  • Microsoft has the most ambitious cloud strategy of the nine companies profiled, and their cloud-first design initiative shows they have faith in Azure performing in the enterprise.  Microsoft Dynamics AX 2012 will first be released on Azure, then on-premise is a case in point. Microsoft is impatient  to move into a subscription model with its evolving cloud platform. Gartner’s analysis of Microsoft’s cloud strategy is shown in the following graphic.

Microsoft Cloud Strategy

  • Oracle is one of the most persistent cloud washers according to Gartner, often bending the definition of cloud computing to align with their strengths.  Their continual efforts to redefine the cloud are also designed to get their formidable customer base to upgrade to the latest generation of their applications.  Of the vendors compared they also have the greatest strength in enabling technologies, evidenced by their Exalogic and Exadata systems, Oracle Linux and Solaris operating systems.

Oracle cloud strategy

  • SAP’s cloud strategy looks to make the most of the large, highly profitable R/3 installed base while partnering with IaaS vendors to build out their cloud platform according to Gartner.  The point was made that of the vendors in the comparison, SAP prioritizes enabling technologies over owning the entire cloud stack as Oracle aspires to.

SAP Summary Chart

Bottom line: If you want to know  the truth about a given cloud vendor evaluate their Cloud Services, Professional Services track record and how well they transform enabling technologies into successful products.  The following graphic provides a summary of the vendors included in the webinar:

Summary Chart

First Steps to Creating a Cloud Computing Strategy for 2013

Cloud computing strategy 2013 will be one of the most pivotal years for cloud computing because trust in these technologies is on the line.

Expectations are high regarding these technologies’ ability to deliver business value while reducing operating costs.  Enterprises’ experiences have at times met these high expectations, yet too often are getting mixed results.  Managing cloud expectations at the C-level is quickly emerging as one of the most valuable skills in 2013. The best CIOs at this are business strategists who regularly review with their line-of-business counterparts what is and isn’t working.  These CIOs who are excelling as strategists also are creating and continually evaluating their cloud computing plans for 2013.  They are focusing on plans that capitalize the best of what cloud computing has to offer, while minimizing risks.

CIOs excelling as strategists are also using cloud computing planning to punch through the hype and make cloud technologies real from a customer, supplier and internal efficiency standpoint.  Lessons learned from these cloud computing planning efforts in enterprises are provided below:

  • Cloud computing needs to mature more to take on all enterprise applications, so plan for a hybrid IT architecture that provides both agility and security.  This is a common concern among CIOs in the manufacturing and financial services industries especially.  As much as the speed of deployment, customization and subscription-based models attract enterprises to the cloud, the difficult problems of security, legacy system integration, and licensing slow its adoption.  There is not enough trust in the cloud yet to move the entire IT infrastructure there in the majority of manufacturing companies I’ve spoken with.
  • Reorganizing IT to deliver greater business agility and support of key business initiatives will be a high priority in 2013.  The gauntlet has been thrown at the feet of many CIOs this year: become more strategic and help the business grow now.  Cloud is part of this, yet not its primary catalyst, the need to increase sales is.  IT organizations will increasingly reflect a more service-driven, not technology-based approach to delivering information and intelligence to the enterprise as a result.
  • Recruiting, training and retaining cloud architects, developers, engineers, support and service professionals will be a challenge even for the largest enterprises.  There isn’t enough talent to go around for all the projects going on and planned right now.  State Farm Insurance has 1,000 software engineers working on their mobility applications for claims processing and quoting for example.  And they are hiring more.  Certifications in cloud technologies are going to be worth at least a 30 to 50% increase in salary in specific positions. This is very good news for engineers who want to differentiate themselves and get ahead in their careers, both financially and from a management standpoint.
  • Measuring the contributions of operating expense (OPEX) reductions is going to become commonplace in 2013.  From the cloud computing plans I’ve seen, OPEX is being tracked with greater accuracy than in any other year and will be a strong focus in the future.  The capital expense (CAPEX) savings are clear, yet OPEX savings in many cases aren’t. Cloud computing’s greatest wins in the enterprise continue to be in non-mission critical areas of the business.  This is changing as cloud-based ERP systems gain adoption within businesses who are constrained by monolithic ERP systems from decades ago.  Plex Systems is a leader in this area and one to watch if you are interested in this area of enterprise software.  SaaS is dominating in the area of lower application costs and high user counts, which is the Public Computing Sweet Spot in the following graphic:

Figure 1 Cloud Computing Planning Guide

Source: 2013 Cloud Computing Planning Guide: Rising Expectations Published: 1 November 2012 Analysts: Drue Reeves, Kyle Hilgendorf

  • Start building a SaaS application review framework including Service Level Agreement (SLA) benchmarks to drive greater transparency by vendors.  Gartner forecasts that the SaaS-based cloud market will grow from $12.1B in 2013 to$21.3B in 2015, with the primary growth factors being ease of customization and speed of deployment. CIOs and their staffs have SaaS frameworks already in place, often with specific levels of performance defined including security and multitenancy audits.  SLAs are going to be a challenge however as many vendors are inflexible and will not negotiate them. At a minimum make sure cloud service providers and cloud management platforms (CMP) have certifications for ISO 27001 and Statements on Standards for Attestation Engagements (SSAE) No. 16, as this shows the provider is making investments in availability, security and performance levels.
  • Create a Cloud Decision Framework to keep technology evaluations and investments aligned with business strategies.  Business and application assessments and the vendor selection process need to take into account application requirements, role of external cloud resources, and how the RFI will be structured. These process areas will vary by type of company – yet concentrating in application requirements goes a long way to reducing confusion and forcing trade-offs in the middle of a review cycle.  The following is an example of a Cloud Decision Framework:

Figure 2 Sample Cloud Decision Framework

Source: 2013 Cloud Computing Planning Guide: Rising Expectations Published: 1 November 2012 Analysts: Drue Reeves, Kyle Hilgendorf

  • Mitigating risk and liability through intensive due diligence needs to become any cloud-based companies’ core strength.  Regardless of how the HP-Autonomy litigation is resolved it is a powerful cautionary tale of the need for due diligence.  And let’s face it: there are way too many SaaS companies chasing too few dollars in the niche areas of enterprise software today.  A shakeout is on the way, the market just can’t sustain so many vendors.  To reduce risk and liability, ask to see the financial statements (especially if the vendor is private), get references and visit them, meet with engineering to determine how real the product roadmap is, and require an SLA.  Anyone selling software on SaaS will also have revenue recognition issues too, be sure to thoroughly understand how they are accounting for sales.
  • Design in security management at the cloud platform level, including auditing and access control by role in the organization.  One manufacturing company I’ve been working with has defined security at this level and has been able to quickly evaluate SaaS-based manufacturing, pricing and services systems by their security integration compatibility.  This has saved thousands of dollars in security-based customizations to meet the manufactures’ corporate standards.

Bottom line: 2013 is the make-or-break year for cloud in the enterprise, and getting started on a plan will help your organization quickly cut through the hype and see which providers can deliver value.


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