The latest round of forecasts published in the report,  Gartner Forecast: Enterprise Software Markets, Worldwide, 2012-2017, 2Q13 Update shows CRM eclipsing ERP in worldwide market size in 2017.  The following graph compares the relative growth of CRM, ERP, Business Intelligence (BI), Supply Chain Management and Web Conferencing, Collaboration/Social Software Suites.  Source: Gartner Forecast: Enterprise Software Markets, Worldwide, 2012-2017, 2Q13 Update.  Please click on the image to increase its size for easier reading.

Key Take-Aways

• Comparing Gartner’s Q1 and Q2 CRM forecasts shows just how fast CRM growth is accelerating, netting a 56% increase in CAGR in the forecast period (2012 – 2017) from 9.7% in the Q1 forecast to 15.1% in the latest Q2 forecast. Sources: Gartner Forecast: Enterprise Software Markets, Worldwide, 2012-2017, 2Q13 Update and Enterprise Software Markets, Worldwide, 2012-2017, 1Q13 Update. Please click on the image to increase its size for easier reading.

• Worldwide enterprise software spending is projected to be $304B in 2013 in the latest forecast, up from $279B in the Q1 forecast. Gartner claims stronger demand for CRM, supply chain management and security are leading to accelerating market growth.
• ERP spending worldwide is projected to grow from $26.03B in 2013 to $34.3B in 2017, attaining a CAGR in the forecast period 2012 – 2017 of 7%.
• Business Intelligence (BI) worldwide is projected to grow from $14B in 2013 to $18.6B in 2017, attaining a CAGR in the forecast period 2012 – 2017 of 7.3%.
• Supply Chain Management (SCM) worldwide is projected to grow from $9.16B in 2013 to $13.6B in 2017, attaining a CAGR in the forecast period 2012 – 2017 of 10.4%.
• Data Integration Tools and Data Quality Tools worldwide are projected to grow from $4B in 2013 to $6B in 2017, attaining a CAGR in the forecast period 2012 – 2017 of  10.3%.

 Bottom Line:  Gartner’s latest forecasts show that enterprises are realizing the most valuable assets they have are solid, long-term customer relationships.  Trust really is the new currency, as my friend Michael Krigsman often says.

One manufacturer’s CIO summed it up well when he said they hit an inflexion point when their marketing analytics showed over 60% of dealers were looking up product and pricing data on their smartphones and tablets instead of their laptops, a 4X increase in just five months.

The following is a roundup of mobile apps and app store forecasts reflects the urgency all enterprises, including manufacturers, have to get results from their mobility strategies:

• Email and calendaring (46%), Instant Messaging (IM) (37%), and office & personal productivity (26%) are the three most popular uses of mobile applications today according to a recent Gartner survey. CRM, at 19%, and ERP, at 17%, have been predicted to grow the fastest of all enterprise applications on the mobile over the next three years. The following is a table showing mobile application usage by software segment. Source: Gartner User Survey Analysis: CRM, Cloud and Mobile Dominate Application Software Spending Trends Published: 6 March 2013.

• Mobility solutions (SMS, Mobile apps, Mobile Web) are the most used and planned for self-service channel (29.3%) according to a recent Gartner survey.  This is followed by Web Chat (25%); Social CRM (25%); Virtual Assistants (23.6%); Collaborative Browsing (21.4%); Video Services and Video Chat (18.6%); Web-Based Self-Service Supported by Knowledge Engine (15.7%); IVR Self-Service (10.7%) and e-mail response management (9.3%).  For the fully survey results please see Gartner Market Trends: Customer Management BPO Matures With BPaaS and Multichannel, Analytics, Marketing and Mobility Services Published: 8 April 2013.

• 84% of smartphone shoppers use their phones while in a physical store and 30% use their smartphones to find information instead of asking store employees. according to a study released this month from Google.  The study, How Mobile Is Transforming the Shopping Experience in Stores, can be downloaded here. The study also found that 65% prefer mobile sites and search, and 35% prefer apps, not surprising for a study sponsored by Google.  There are several interesting findings in the report, including the finding the in-store price comparisons are the most common mobile activity across the eight categories included in the study.

• Google’s Android operating system is dominating mobile operating systems shipments according to both Gartner and IDC and will continue to lead the market through 2016. The following graphic shows Gartner’s analysis of 57.9% of all mobile devices globally running the Android operating system in 2012.    Source: Gartner: Bring your Own Device (BYOD): Mobility Trends and Securing the Transition. Lawrence Pingree, Research Director.  Also see my previous post, 2013 Roundup of Smartphone and Tablet Forecasts & Market Estimates.

• IDC’s prediction of how mobility will drive intelligent systems adoption, in addition to device management research on smartphone and tablet adoption is covered in the presentation, The Mobility Game Changer; Why The Workplace Will Never Be The Same. The following graphic shows IDC”s forecast of mobile-based intelligent device shipments by market and industry.

• The value of mobile payment transactions will reach $721B in 2017, attaining a Compound Annual Growth Rate (CAGR) of 35% for the period 2012 to 2017.  The volume of transactions will be $23.2B, attaining a 33% CAGR in the same forecast period. Source: Gartner Forecast: Mobile Payment, Worldwide, 2013 Update Published: 15 May 2013.

• The value of Mobile Payment Transactions on Mobile Web platforms globally is forecast to increase from $86.1B in 2013 to $320B in 2017 attaining a projected 38.8% CAGR.  Source: Gartner Forecast: Mobile Payment, Worldwide, 2013 Update Published: 15 May 2013.

• Global mobile payment transaction value is projected to grow from $235B in 2013 to $721.3B in 2017, attaining a projected 32.4% CAGR.  Source: Gartner Forecast: Mobile Payment, Worldwide, 2013 Update Published: 15 May 2013.

• The fastest growing types of mobile payment transactions globally as measured by projected CAGR from 2012 to 2017 include ticketing (51%); airtime top-ups (40%); merchandise purchases (38%); bill payments (35%); and money transfers (33%). Source: Gartner Forecast: Mobile Payment, Worldwide, 2013 Update Published: 15 May 2013.

Mobile App Store Forecasts

• Gartner predicts that by 2016, there will be 310B downloads with an estimated value of $74B in revenue from app stores. Gartner has also predicted that by 2017, 25% of all enterprises will have an app store. This includes both new application purchases and recurring revenues form subscription pricing models.  Source: Gartner Market Trends: Mobile App Stores, Worldwide, 2012.

•  90% of global mobile app store downloads in 2013 are forecast to be free, increasing to 93% in 2017.  73.2B free downloads will occur in 2013, increasing to 287.9B by 2017.  Paid-for downloads will increase from 8.1B in 2013 to 21.6B in 2017.  Source: Gartner Market Trends: Mobile App Stores, Worldwide, 2012.

• In-app purchase will drive 41% of the store revenue in 2016. While the market is moving toward free and low-priced apps, in-app purchase will increase in both the number of downloads and in the contribution to the store revenue. As a result, we see a shift in user spending from upfront purchases to in-app purchases.   Source: Gartner Report Market Trends: Mobile App Stores, Worldwide, 2012.

• 99% of the paid-for app store downloads cost less than $3 each. Similar to free apps, lower-priced apps will drive the majority of the downloads. We estimate that apps between $0.99 and $2.99 will account for 87.5% of the paid-for downloads in 2012, up from 86.8% in 2011. That percentage will further increase to 96% by 2016. Source: Gartner Report Market Trends: Mobile App Stores, Worldwide, 2012.

• Global mobile app store revenue is projected to reach $24.5B in 2013, increasing to $74B in 2017.  Paid-in downloads (69%); in-app purchase (17.3%) and advertising (13.7%) are the three revenue sources in 2013.  In 2017, revenue shifts significantly to paid-for downloads contributing 45.2% of revenue, in-app purchases, 40.9% and advertising, 13.9%.  Source: Gartner Report Market Trends: Mobile App Stores, Worldwide, 2012. 

Update from ServiceNow’s Financial Analyst Day and Knowledge13 

On May 13^th they held their Financial Analyst Day at the Aria Resort & Casino in Las Vegas, the same location they hosted Knowledge13, their annual user conference held May 12^th through the 16^th.  You can download a set of the slides presented at the Financial Analyst Day here, and view videos and presentations from Knowledge 13 here.   ServiceNow executives are calling the next phase of their growth ERP for IT. Both in the Financial Analyst Day presentation and the presentation given by President and CEO Frank Slootman at the Pacific Crest Emerging Technology Summit on February, 13^th, this concept is shown.  Below is a slide from the February 13^th presentation given at the Summit.  You can download the slide deck from the Pacific Crest Emerging Technology Summit here.

Five Ways CIOs Can Prepare For The Cloud

I had the opportunity to catch up with Arne Josefsberg, CTO of ServiceNow during Knowledge13.  He shared insights into how ServiceNow’s core customer base, predominantly CIOs and their IT Departments, are driving greater business value into their organizations using the Service Automation Platform.  Arne mentioned that ServiceNow sees IT Operations Management (ITOM) and Platform-as-a-Service (PaaS) as critical to their growth, in addition to enabling those without programming expertise (ServiceNow calls them Citizen Developers) with intuitive, easily used application development tools.

He also shared lessons learned and five ways CIOs can prepare for the cloud, which are listed below:

• Adopt Cloud Architectures With An Open Mind And See Them As Business Value Accelerators.  Arne advises CIOs who are considering cloud-based initiatives to concentrate on capturing and communicating business value first, including time-to-market, cost and time savings advantages.  Getting beyond a purely cost-cutting mindset is critical for IT to become a strategic partner with business units.  He says that he’s seeing CIOs gain a greater voice in strategic planning initiatives by clearly defining the business value of cloud-based development while pursuing rapid application development.

• Taking a leadership position in application development leads to gaining greater influence and involvement in strategic plans and initiatives.  This point galvanizes the entire ServiceNow executive team, they all speak of enabling the Citizen Developer to create new applications on their platform without writing a single line of code.  ServiceNow and their customer base have bonded on this issue of rapid application development.  And watching Fred Luddy, Chief Product Officer of ServiceNow move quickly through application development and deployment scenarios during his keynote showed how deeply engrained this value is in the company’s DNA.

• CIOs need to realize that their resource and human resource management needs in five years will shift to business transformation away from IT alone.  There is a shortage of IT analysts and professionals who are adept at being business strategists, capable of leading transformational application development.  IT analysts and experts need to be trusted partners with business units, continually moving IT-related barriers out of the way while streamlining new application development.  Arne cited how General Electric is excelling on this dimension, consolidating 17 incident management systems into a single ServiceNow application.  All that was possible because the IT teams at GE are an essential part of business unit operations.

• CIOs need to move beyond managing IT using cost and efficiency alone and think in terms of opportunity-to-cost instead. Arne’s point is that the most respected and counted-upon CIOs he knows today are either making or have made this transition.  They have moved beyond an IT legacy mentality of managing just to cost or efficiency.  Instead, the CIOs emerging as strategists and core members of the executive team are aligning IT as a core part of their company’s ability to compete.

• Use cloud architectures and rapid application development to make IT more strategic in scope now.  The companies winning awards at Knowledge13 for their applications showed a common thread of anticipating and acting on the strategic needs of their business quickly, often delivering completed applications ahead of schedule and under budget.

Bottom line: Making IT strategic begins by moving away from the constraints of managing to cost and efficiency metrics alone.  Cloud-based platforms and rapid application development technologies are assisting CIOs and their staffs to be more strategic, less tactical, more responsive and focused on line-of-business needs and requirements first.

Disclosure: ServiceNow paid for travel to Knowledge13.  I’ve never held equity positions in ServiceNow, and they are not a client.

Gaining a clear, contextually-based view of customers isn’t easy. Fine-tuning system integration to understand the nuances of customers, gain greater insights and infusing customer intelligence through a company requires more than APIs and cloud platform integration.  It requires a precise strategy of integration to align customer data to ongoing strategies.

The bottom line is that customer-driven integration is reshaping CRM and will accelerate as cloud platforms, combined with APIs, reorder the customer relationship landscape.

To gain greater insights into what’s going on in the area of cloud-based CRM integration and the impact of the API economy, I recently spoke with Lou Guercia, President and CEO, and Betsy Bilhorn, VP Marketing and Product Management of Scribe Software

Key take-aways from my interview with them include the following:

Cloud integration is one of the fastest growing areas of enterprise software today, made more complex by cloud platform providers creating their own unique approaches to APIs.  What are the top three lessons you’ve learned navigating Scribe through the many potential product and services strategies cloud platforms are providing today?

The top that come to mind are understanding that your cloud platform vendor absolutely affects your product offering and making sure your offering is portable, that you’re not too deep in one vendor’s technology or platform.

There are a many new cloud services and platforms – you have to make a choice between an established, proven vendor or taking a chance as an early adopter of something new. We decided to be an early adopter and we’ve had mixed results, which at times caused problems for our customers. Customers don’t care who caused your slowdown or outage – they expect that you have service available no matter what. As a result, we had to build out sophisticated and sensitive monitors, fail-over and availability capacity.

One of the things we did, and it was fairly controversial at Scribe, was make sure our offering was highly portable. Given the vendor’s brand name, there were people who felt that there was no way something could go wrong and we were showing a vote of no confidence by not completely embracing the service. Others at Scribe were skeptical and insisted we not get too deep into this particular technology so we could pull the plug quickly if it didn’t work out. Even though it was not a popular decision, we made sure this portability was part of our architecture from day one and we’ve resisted getting too dependent on unique capabilities even though it could be easier from a development standpoint.

Keeping that discipline turned out to be a very smart move – we’ve since had to move parts of our offering to other platforms and services that could better accommodate our growth and capacity needs. As we compare notes with other integration companies with cloud offerings, we’re hearing similar stories. We want to focus on our features and services and we want to be able to make sure our platform is stable and performing for our customers. Having the ability to move parts and pieces of our architecture when we need to is critical as we grow. Our planning and roadmap now include a capacity review and all options are on the table, including changing technology platforms or vendors.

Many say enterprise software is quickly moving in the direction of an API economy.  What are your thoughts on the API economy beginning with how you define it, and how will it change CRM in the next three years?

When we look at the enterprise software space and how it is still very challenging to integrate the data across these applications, it absolutely makes sense directionally. There are so many new technology stacks and platforms out there and the old ones aren’t going away either. APIs are a logical framework for people to access, share, and integrate data regardless of where it lives or how it’s stored.

This is really exciting for CRM. There is a lot of talk about the 360 degree view of the customer but the reality for most businesses is that actually getting all that data is still difficult and not standardized. If you’ve got a lightweight API to access any number of customer data points in and outside the business, CRM would be more a framework and platform to select and mash up those data feeds in a tailored presentation for particular roles in your business – sales, support, marketing, etc. You could put a very powerful, functionally relevant view of the customer at your employee’s fingertips. We’re already seeing that today with the ability to embed Google Maps, social feeds, and the like in CRM. But think about how incredible it could be for CRM if you were able to do that type of embed with virtually any data source.

In such a highly competitive, rapidly changing and technically complex market area, how do you continually innovate and generate new ideas?

The best way to describe how we innovate is that we take a clean sheet of paper approach when thinking about product. Our product team typically looks at the business problem first and gets very creative about how to achieve the desired outcome. We also take a hard look at the status quo and challenge “how can we do this completely different and better”? Our goal is to delight our partners and customers with product that they find easy to use and that gets the job done without a lot of hassle or drama. Sometimes it takes an unusual path and it typically isn’t your big, trendy items. For instance, most integration projects require a team of people to accomplish – experts in data, experts in business process, usually an outside consultant or professional services vendor. One of the things we heard in passing was what a pain in the neck it was to manage multiple clients and getting permission from the client’s IT organization to access the integration environment – one of those things you just talk about as an accepted pain of doing business. In response, our product team brought in social features like the ability to invite or de-invite members to a specific customer organization and allowing the owner of that customer organization to set permissions of what that member could do in their organization. In the grand scheme of things, this doesn’t seem like a big deal but today, that social user experience really excites our customers and partners and it’s become a key differentiator for Scribe.

For many enterprise software companies, selling through resellers is challenging.  What key lessons has Scribe learned about making a reseller strategy for cloud integration services successful? 

We’ve been selling through the channel for a long time now – understanding their business model and supporting their success is paramount to us as a business. Partners are all about standardization, efficiency, quality, and repeatability at scale – you need to be oriented to that outcome whether it’s product, programs, pricing, communications, or support. Who you are and what you provide needs to be consistent and fair to the entire community.

Our motto is “own the customer, respect the partner”. When we’re servicing a customer directly, we are very cognizant of the partner and we know that customer’s experience with Scribe can directly impact their relationship with that partner. You have to weigh your interactions with a customer against the whole of your partner relationship and calibrate accordingly. So we make sure that we give our customers the same touch and quality service as our partners. Your reputation with your partners and that partner community will dictate your success in the channel. You have a great reputation with your partners and you’ve got their back – they are going to reward you by being incredibly loyal. The top reason we hear from prospective partners looking to make a switch is “this vendor was really difficult to work with” or “this vendor failed in delivering to my customer and I need something now to get this customer back on track”.

The growth of the API economy has many parallels to growing a reseller-based business.  How do you view these parallels and how do they open up greater avenues of innovation to benefit those companies using CRM today and in the future through resellers?

Where we see a distinct parallel is taking hold of a something like data or an application, and evolving it into a completely new and innovative offering, which completely transforms the experience of using it – for the better. With APIs it’s about evolving connectivity and access. In CRM, the most successful resellers reinvent the CRM application as a platform. They craft entirely new solutions on CRM that are imbued with their particular expertise in a vertical or a set of business processes that make CRM much more straightforward and easier to use. Often these offerings are unrecognizable from the original CRM. This innovation benefits business customers as the reseller is productizing their expertise and making CRM much more turnkey for them. At the end of the day, it isn’t about the particular CRM vendor or platform but more about the particular capabilities that a reseller has in their turnkey CRM offering. That’s a huge benefit to customers as they’re now able to focus on picking the right reseller and their expertise to help their business versus being distracted and consumed with the nuts and bolts of hand-tailoring the CRM application to fit their needs.

What are you seeing in terms of on-premise to cloud migration on the part of resellers?  Are they bringing you more deals that are cloud-based versus on-premise?  Does this vary between North America and EMEA (Europe, the Middle East & Africa)? 

The reseller channel is going through an interesting evolution with cloud. What we’re seeing are resellers typically making two choices, going cloud or sticking with on-premise but focusing on larger, enterprise deals. We’re seeing some of our existing resellers re-aligning their offerings and services around cloud; they may continue to do premise deals but they aren’t leading with premise. We’re increasingly working with a third category of new partners who have entered the CRM business recently as exclusively cloud; typically these resellers represent multiple CRM vendors (Salesforce, Sugar, Dynamics CRM Online, etc.) in their practice.

Regardless of the partner orientation towards cloud, we are definitely seeing a shift towards cloud deals. EMEA is behind North America but is quickly closing the gap – we see growing adoption of cloud applications and there is an excitement and interest in EMEA for more cloud.

Can you walk me through the new product development cycles you use?  How are you seeing the market cadence right now from a cloud integration perspective?  Is it 6 months, or shorter than that for each new release?

The cloud is driving faster release & upgrade cycles overall. Customers use cloud applications in their everyday lives and those consumer applications typically have rapid response to feedback; it’s not unusual to get an update on your iPhone apps once a month. We’re seeing those same expectations in the business applications space – you shouldn’t be waiting 6-12 months or more for updates to the product. The nature of cloud allows us to be much more responsive giving us the flexibility to push out updates when we need to.

Our release cadence is 8 weeks. We might go longer to a 16- or 24-week cycle for a major release. Our connectivity release cycle is much faster. Each quarter we’re typically releasing 2-3 new connectors and 2-3 upgrades to existing connectors. This release cadence has been a real advantage for us in closing deals and building customer loyalty. Every two months we’re putting in enhancements and new features – many of those driven from direct customer feedback. We’ve won more than a few competitive and strategic wins because we were able to incorporate feedback from the prospect during the proof of concept or trial phase of those deals within a short period of time.

Earlier we spoke about how your company is successfully using personas to guide new product development.  Can you comment on how personas guide the development and launch of new products?

Personas provide that guiding star for the development team to build towards. It’s not just the “what” and the “how”, it’s the “who” and the “why”. When we start with personas we’re talking about the business problem or goal that our customer is grappling with. That’s where the innovation we talked about earlier comes in – we try to solve for the real world business problem and an authentic user experience for our target customer. After we have the persona solidified, then we apply a particular technology approach and design. Starting with what success looks like to the customer keeps things very clear and real in terms of design, scope, what the product will and will not do.

The development team has a much clearer understanding who they are building product for and why it needs to be a certain way. If there is a question or difference of opinion about the user experience or the way a certain feature should work, we always go back to the persona. It’s a very efficient sanity check throughout the development process – would our persona really use this feature in this way, would they be comfortable working that way in real life, do they really need this feature or capability to do these extra 5 things we think they do?

Personas are very helpful in discouraging developing products that might be perceived as cutting edge to the tech community but ultimately don’t give the customer what they need and want. We like cool technologies and features, and we’ll put it in there but only if it fits the persona.

Has any customer measured the impact of Scribe integration solutions in the context of improved user experience and customer satisfaction?  If so, can you share those figures? 

An interesting question and one we asked in our recent State of Data Integration 2013 survey. What we found was that over 70% of our survey respondents had no formal process for evaluating the success of their integration and articulating the return on investment either in operational improvements or customer satisfaction. With a partner involved there is some improvement as the partner has to typically prove the success of their engagement but it’s not what we’d like it to be. It’s virtually impossible to get a customer to capture any meaningful metrics after the project has been completed.

What we’re finding is that partners and customers don’t know where to begin to measure the impact of their integration and there are no standard templates or resources to use as part of the project planning & tracking. This is a problem we’re tackling in the coming months, providing standard metrics that any partner or customer can use to track the success of their integrations.

What are the most important metrics to keep in mind when evaluating the performance of a cloud integration platform?  How did these metrics influence the design, coding and launch of Scribe Online?

The most important metrics are usability and performance. The obvious one, performance comes in many flavors but the big ones we look at are the responsiveness of the platform user interface, the throughput and speed of the integrations, and the reliability/availability of the platform overall. These are table stakes. When we say usability, we mean how many customers are actually creating and running integration jobs? How often are they logged into the system and what are they doing? Are they adding new integration jobs? Using new connectors? How many customers are renewing and/or increasing their subscription levels? These are metrics we measure. If a customer were evaluating a platform, questions I’d be asking would be “how long does it take to get a typical integration project live and running?”, “do you require professional services and how much/how long does that engagement typically run?”, and when talking to references “did you get your integration project done in the time frame you expected?”

Usability is very, very important to us. You can have a platform that processes billions of rows a day but if it is difficult to configure, use, and maintain, customers are going to gravitate to vendors that have both performance and better usability.

Have you seen a shift in the types of CRM applications being integrated within the last twelve months, and do you see trending of these systems changing in the next three years?  Why or why not?

In the past twelve months, we’ve seen a shift where customers appear to be doing less of the rip and replace with new CRM systems and more where they are adding on other, customer-facing applications with discrete functions like marketing automation, e-commerce, sales productivity, or support. We’re also seeing an uptick in two-tier CRM integrations where a division or line of business will use one vendor’s CRM for specific range of capabilities but want to integrate with the legacy or corporate CRM.

Certainly the CRM vendors are adding more capabilities and providing more complete platforms that include marketing automation, support, e-commerce, finance, and social. What will be very interesting in the next three years is if businesses will embrace these platforms completely or if they will use parts and pieces of these platforms and integrate them with existing application investments or other CRM platforms. For instance, would a business decide to purchase Salesforce Support Cloud and integrate that with NetSuite? We think given what we’re seeing in with legacy applications – that businesses have made major investments in and are still realizing value from these applications – that a rip and replace to a complete CRM platform from one major vendor might be a bit of stretch. Given that cloud integration is evolving quickly, it would seem that a business could put together best of breed cloud CRM apps just as they did with premise applications in the past.

Often integration in small and medium businesses, which is a market Scribe excels in, are complacent about the need to change and adopt a more unified CRM system.  Is complacency is your biggest competitor?  How do you overcome that in your channel development, marketing and selling strategies?

We’re seeing SMBs are as savvy as our largest enterprise customers about integration. They get the need for an integrated CRM system to keep competitive. SMBs are requiring integration in the first phases of their CRM implementation and are asking partners about it. That’s a big shift from 4-5 years ago where partners had to educate the customer about the benefits of integration and why spending money/time/resources on integration are valuable. It’s less complacency that is our biggest obstacle with SMBs – its education and outreach that there are affordable, easy-to-use integration options out there for the SMB that allow them to realize the same business benefits as the big companies. If you define complacency as the common belief that there is just nothing out there right now for the SMB, then yes, it’s a competitor. We have been aggressive in recruiting partners who specialize in SMB and making sure our cloud integration platform have the features and capabilities so these partners can service a large volume of smaller customers quickly and cost-effectively. We also work with our partners with other marketing outreach to educate the SMB that integration is possible and how to best approach that first integration project. And it goes back to that usability metric – we want the SMB to have an easy time with integration – so that means proving it with our selling, our marketing, and our partner channel. All of it needs to be approachable and reinforce that integration is accessible and can be realized by the SMB.

What are Scribe’s top three goals for 2013, and how are you tracking to them?

Our top three goals in 2013 are to continue build out the features and services in our cloud platform, continue to offer more customer data connectivity, and continue to build out our ecosystem of ISVs and partners using our online platform. We’ve had excellent success in all three areas – we’ve announced partnerships and connectivity to Marketo, Silverpop, and ExactTarget and we continue to build and enhance the platform. The interest in the channel and the ISV community is very strong – we have as much incoming as we do active outreach – and we expect more ISV partnership announcements later this year.

When you and your company look three years into the future, what will cloud integration look like? 

In three years, integration should be ubiquitous in most business applications. It’s not just about APIs – it’s about customers being able to connect quickly, easily, and seamlessly to other applications without having to stitch code together or understand what entities and methods to use. When we use consumer applications today, we don’t care or think about things like how to send a Tweet to my Facebook feed – we just press a button and it happens. I think you’ll see more turnkey integrations based on common business processes that business users can provision and manage within the  user interface of their business application instead of using a separate application. There will always be a market for more sophisticated, unique integration needs but common business practices such as sales order processing should be something a business analyst or system administrator could invoke within a CRM or ERP user interface, perform some light customizations as needed, and provision.

SAP Headquarters, Building 1 Source: Wikipedia

During 2012 the Enterprise Resource Planning (ERP) market experienced sluggish growth of just 2.2%, yet Software-as-a-Service (SaaS), financial management and Human Capital Management (HCM) applications showed potential for breakout growth.

Through the challenging times of the previous year however, SAP still retained worldwide market share leadership.  These and other insights were recently published in the recent report, Market Share Analysis: ERP Software Worldwide, 2012 authored by Chris Pang, Yanna Dharmasthira, Chad Eschinger, Koji Motoyoshi and Kenneth F. Brant.

Key Take-Aways

• Overall market growth of just 2.2% and the top ten vendors owning 64% of the worldwide ERP market is leading Gartner to predict further consolidation of the industry.
• SAP had just over $6B in total ERP software revenue in 2012, leading the worldwide market with 24.6% market share.  Oracle had $3.12B and Sage, $1.5B in software revenues for 2012.  Oracle’s market share was 12.8%, and Sage, 6.3%. The following graphic shows worldwide ERP market share for 2012.

• Infor achieved 49.5% revenue growth in 2012, increasing their 2011 sales from $1B in 2011 to $1.5B in 2012.  Their market share increased from 4.2% in 2011 to 6.2% in 2012.
• Microsoft achieved 4.2% revenue growth  in 2012, increasing revenue from $1B in 2011 to $1.1B in 2012.  The majority of these sales are for the Microsoft Dynamics AX ERP system.
• The fastest growing ERP vendors  in 2012 include Workday, Cornerstone OnDemand, WorkForce Software, Ventyx and NetSuite.
• Workday grew 114.7% in 2012, increasing revenue from $88.6M in 2011 to $190.3M in 2012.
• Cornerstone OnDemand grew 61.5% in 2012, increasing revenue from $58.4M in 2011 to $94.3 in 2012.
• WorkForce Software grew 39.8% in 2012, increasing revenue from $11.8M in 2011 to $16.5M in 2012.
• NetSuite grew 34% in 2012, increasing revenue from $139.7M in 2011 to $187.1M in 2012.
• SaaS-based ERP revenues are projected to grow from 12% worldwide in 2013 to 17% in 2017.  The following graphic from the report Gartner’s Market Trends: SaaS’s Varied Levels of Cannibalization to On-Premises Applications published: 29 October 2012 shows this progression.  You can find a research roundup at the previous post SaaS Adoption Accelerates, Goes Global in the Enterprise, which provides additional insights into which factors are driving SaaS adoption.

Bottom line:  SAP’s continued market dominance depends on how well the company orchestrates it core ERP strategy with the following areas: BusinessObjects 4.0, its highly regarded analytics suite; social application adoption (StreamWorks and SuccessFactors Jam); the many Cloud-based initiatives they have including SuccessFactors and BusinessbyDesign; mobility platform wins;  and major wins with their SAP Sybase DBMS and HANA architectures.

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 13^th 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 4^th quarter of 2012.

From 4^th quarter 2011 to 4^th 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.

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 4^th 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 4^th quarter of 2011 to the 4^th 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.

With so much interest, there is much confusion as well.  I recently spoke with Cindy Jutras, founder and CEO of MintJutras.  Her firm has recently completed a survey of SaaS adoption in manufacturing, distribution and other industries.  She found the following:

• 49% of respondents in the manufacturing & distribution industries do not understand the difference between single- and multi-tenant SaaS architectures.  Overall 66% of respondents to the survey did not know.

• SaaS-based applications are 22% of all manufacturing and distribution software installed today, and will grow to 45% within ten years according to MintJutras.

• The three most important characteristics of a SaaS solution in manufacturing and distribution include giving customers a measure of control over upgrades, consistent support for global operations and allowing for rapid and frequent upgrades.

Why Manufacturers Are Looking To Cloud Computing  

Manufacturers are under constant pressure to increase accuracy, make process speed a competitive force, and capitalize on their internal intelligence and knowledge to make every supplier, distributor and service interaction count.  The manufacturers spoken and visited with to gain the following insights are in the high tech, industrial and aerospace and defense industries, where rapid product lifecycles and short time-to-market schedules are commonplace.

Cloud-based strategies give these companies the chance to bring their own innate intelligence and knowledge into every sales situation.  While on-premise systems could also do this, cloud-based systems were quicker to roll out, easier to customize and showed potential to increase adoption rates across resellers.

One manufacturing manager explained how during a new product launch the speed and volume of collaboration was so rapid on between suppliers and distributors that an allocation situation was averted.  That he said, made senior management believers.  These epiphanies are happening daily in manufacturing.

Based on my visits with manufacturers, here are the ten ways they are using cloud computing to revolutionize manufacturing:

• Capturing and applying company-wide intelligence and knowledge through the use of analytics, business intelligence (BI), and rules engines.  For the many manufacturers who rely on build-to-order, configure-to-order and engineer-to-order strategies as a core part of their business models, using cloud-based platforms to capture knowledge and manage rules is accelerating. A key part of this area is mobility support for analytics, BI and rules engine reporting and analysis.
• Piloting and then moving quickly to full launch of supplier portals and collaboration platforms, complete with quality management dashboards and workflows.  Among the manufacturers visited, those in high tech are the most advanced in this area, often implementing Vendor Managed Inventory (VMI) and demand management applications that deliver real-time order status and forecasts.
• Designing in services is now becoming commonplace, making cloud integration expertise critical for manufacturers.  From simplistic services integration on iPhones to the full implementation of voice-activated controls including emergency assistance in the latest luxury cars, adding in services integrated to the cloud is redefining the competitive landscape of industries today.  Revising a product or launching an new product generation with embedded services can mitigate price wars, which is why many manufacturers are pursing this strategy today.
•  Accelerating new product development and introduction (NPDI) strategies to attain time-to-market objectives. Using cloud-based platforms in high tech manufacturing is growing today as time-to-market constraints are requiring greater collaboration earlier in design cycles.
• Managing indirect and direct channel sales from a single cloud platform tracking sales results against quota at the individual, group and divisional level is now commonplace across all manufacturers visited.  Dashboards report back the status by each rep and for sales managers, the profitability of each deal.
• Using cloud-based marketing automation applications to plan, execute and most important, track results of every campaign.  Marketing is under a microscope in many manufacturers today, as marketing automation applications have promised to deliver exceptional results and many manufacturers are still struggling to align their internal content, strategies and ability to execute with the potential these systems promise.
• Automating customer service, support and common order status inquiries online, integrating these systems to distributed order management, pricing, and content management platforms.  Manufacturing industries are at varying levels of adoption when it comes to automating self-service.  The cost and time advantages in high tech are the highest levels of adoption I’ve seen in visiting manufacturers however.
• Increasing reliance on two-tier ERP strategies to gain greater efficiencies in material planning, supplier management and reduce logistics costs.  Manufacturers are also using this strategy to gain greater independence from a single ERP vendor dominating their entire operations.  Several manufacturers remarked that their large, monolithic ERP systems could not, without intensive programming and customization, scale down to the smaller operational needs in distributed geographic regions.  Cloud-based ERP systems are getting the attention of manufacturers pursuing two-tier ERP strategies.  Acumatica, Cincom, Microsoft, NetSuite and Plex Systems are leaders in this area of ERP systems.
• Reliance on cloud-based Human Resource Management (HRM) systems to unify all manufacturing locations globally.  This often includes combining  multisite talent management, recruiting, payroll and time tracking.  Contract manufacturer Flextronics uses Workday to optimize workforce allocations across their global manufacturing centers for example.

Bottom Line:  Using cloud-based systems to streamline key areas of their business, manufacturers are freeing up more time to invest in new products and selling more.

In the recent Gartner report  Market Share Analysis: Customer Relationship Management Software, Worldwide, 2012 published April 18, 2013 the authors provide insights into why the worldwide CRM market experienced 12% growth in 2012, three times the average of all enterprise software categories.  Gartner cites demand they are seeing from their enterprise clients for CRM systems that can help acquire customers, analyze and act on customer behaviors, and increase all-channel management performance.  Big data inquiries are also increasing in CRM, driven by the interest enterprise clients have in getting more value from social network data and interactions.

Key take-aways from the report include the following:

• The CRM worldwide market grew from $16B to $18B attaining a 12.5% growth rate from 2011 to 2012.

• 80% of all CRM software in 2012 was sold in North America and Western Europe.    North America CRM sales grew 16.6% from 2011 to 2012.  The highest growth regions of CRM sales between 2011 to 2012 included Greater China (26.9%) and Latin America (24.3%).

• Salesforce.com is the world’s leading CRM software vendor with 14% market share in 2012 ($2.5B in sales), surpassing SAP (12.9%, $2.3B in sales), Oracle (11.1%, 2.01B in sales), Microsoft (6.3%, $1.1B in sales), IBM (3.6%, $649M in sales) and all others.  The top ten vendors worldwide generated $10.9B in sales alone in 2012.

• Worldwide CRM software spending by subsegment shows Customer Service and Support leading all categories with 36.8% of all spending in 2012 ($6.6B), followed by CRM Sales (26.3%, $4.7B), Marketing (includes marketing automation) (20%, $3.6B) and e-commerce (16.9%, $3B).   The following chart shows the distribution of revenue by category:

• 40% of all CRM software sold in 2012 worldwide was SaaS-based.  Gartner states that they are seeing their enterprise clients seek out easier-to-deploy CRM systems compared to on-premise alternatives.  The report states that many enterprises are now replacing their legacy systems with SaaS-based CRM systems as well.  Enterprise clients also report that SaaS-based CRM systems are delivering net-new applications that deliver complementary functionality not possible with legacy and previous-generation CRM platforms.

• Ten fastest growing CRM vendors as measured in revenue Annual Growth Rate (AGR) in 2012 include Zoho (81.2%), Hybris (78.6%), Teradata (70.4%), Bazaarvoice (56.2%), Marketo (54.3%), Kana (44.2%), Demandware (43.9%), IBM (39.4%), Technology One (37.1%) and Neolane (36%).

• Communications, media and IT services were the biggest spenders on CRM in 2012 due to their call center requirements.  Manufacturing including Consumer Packaged Goods (CPG) was second, and banking & securities were third.

What matters most is getting all they can out of every hour their business is operating.  They are all focused on getting beyond the constraints that held their growth back in the past – everyone wants a growth accelerator today.  For manufacturers especially, this includes applications with depth of functionality that can be quickly deployed regionally, and in more cases than ever, globally as well.  Line-of-business leaders want applications that make an immediate impact on their entire value chain.

Just having a cloud strategy is not enough for any enterprise software company anymore. Owning the pain prospects and customers go through daily to get work done is all that matters.  Every application and platform component needs to contribute to the goal of reducing customer’s challenges of doing business.  In studying companies who excel at this, I’ve often used stock market indices to see how they compare to market averages and their competitors.

Charting Progress Using the Cloud Computing Stock Index

Creating and using stock indices to track the performance of specific industry and market sectors is a great way to cut through hype.  I’ve been using these for over a decade to track industries and markets of interest, and have built the Cloud Computing Stock Index. You can download the latest summary here.  If there are companies you think need to be included please let me know.  I deliberately left out IBM, Google, Microsoft, Oracle and SAP as a prerequisite is that a firm derive at least 50% or greater revenue from cloud-based applications and services.

The graph below shows all-time performance of the Cloud Computing Index relative to Microsoft, Salesforce.com. NetSuite and Workday.

Key Take Aways

• NetSuite posted a 62.6% increase in stock performance, followed by Workday (+20.57%), Salesforce (+4.23%) and the Cloud Computing Index (+4%) with Microsoft seeing a 8.18% decline in share price during the period.

• NetSuite, Salesforce and Workday continue to gain new customers in the mid-tier and enterprise areas of the market based on depth of functionality, rapid application development (RAD), and increasing success creating alliances with system integration, selling and technology partners.

• Workday’s expertise in Human Capital Management is accentuated by the depth of analytics and trend analysis and expertise in cloud-based integrations.  Their depth of functional expertise in these areas is leading to rapid growth.

•  NetSuite is succeeding with its two-tier ERP selling strategy against long-standing ERP vendors including Oracle, SAP and others.

Bottom line:  Salesforce, NetSuite and Workday show how developing cloud-based applications designed for ease of use and speed of deployment are winning new customers in the enterprise – and driving up their stock price as a result.

Specifics on the Cloud Computing Stock Index

I used The Cloud Times 100 as the basis of the index, and included the 23 following companies, all of which are publically traded.  These include:

• Akamai Technologies.
• Amazon.com, Inc.
• ARM Holdings plc
• CA, Inc.
• Cisco Systems, Inc.
• Citrix Systems, Inc.
• EMC Corporation
• F5 Networks, Inc.
• Fusion-IO, Inc.
• Intuit
• Juniper Networks, Inc.
• Keynote Systems, Inc.
• NetSuite Inc
• Qualys Inc
• Rackspace Hosting, Inc.
• Red Hat, Inc.
• Riverbed Technology…
• Salesforce.com, inc.
• Symantec Corporation
• Trend Micro Incorporated
• VMware, Inc.
• Websense Inc.
• Workday Inc

 Note: I do not hold equity positions or work for any of the companies mentioned in this blog post or included in the Cloud Computing Stock Index.  

While cost reductions were significant, the greatest contributions were seen in investments in innovation (48%), new product & service development (45%), and boosting sale efforts (38%).

Rackspace recently commissioned a study with market research firm Vanson Bourne, who surveyed 1,300 organizations in the UK and the U.S., including 1,000 Small & Medium Enterprises (SME) and 300 enterprises with 1,000 employees or more.  The methodology included coverage of Financial Services, Retail, IT/Technology, Manufacturing, Business and Professional Services, Media, Logistics, and Mobile Telecommunications sectors, with a further small representative group from other sectors.   Rackspace also partners often with the Manchester Business School to complete qualitative research, which they also did on this project.  You can find an executive summary of the study here, Cloud Computing Research.   In February, Joe McKendrick’s post titled Cloud Computing Boosts Next Generation of Startups, Survey Shows covered the findings from this survey from a start-up standpoint.

Key take-aways from the research include the following:

• In March, Rackspace made a subset of the results available in Microsoft Excel format, titled the Vanson Bourne Cloud Barometer Data – IT Skills.   Thank you Rachel Romoff  and the Rackspace team for responding so quickly to my request for links to the data set and insights into how the study was completed.
• 62% of respondents state that cloud computing is enabling their organizations to invest more money back into their businesses.  Cloud computing improved profits by an average increase of 22% according to the study.  Marketing benefits most 
  significantly from cloud computing investment, as is shown in the table below. I’ve asked for clarification from Vanson Bourne with regard to sales being rolled up into the marketing figure and will update this post when I get a response.

• Average cost reduction is 23% due to cloud computing savings on infrastructure, based on the combined results of UK and US-based respondent analysis.

• 62% of firms have invested funds saved due to cloud computing efficiencies back into their businesses, increasing total investment by an average of 23%.  The following table from the study shows the prioritization of investments being made based on funds saved from cloud computing:

• 56% of organizations are using open source technology as part of their cloud strategies and 86% say that using open source cloud technology boosts their business’ ability to innovate.

• 68% say their organizations are increasing their use of open source cloud computing technology due to the lower cost of ownership (58%) and the greater stability and robustness of it as a platform (45%).

• Manufacturers are saving $774,000 (£506K) per using cloud providers according to the study.  Presented below is a table from the Vanson Bourne study comparing industries.

Bottom line:  Using the cost and time savings from cloud computing to free up up resources for product innovation is giving these companies a long-term competitive advantage in the market.

The accuracy, speed and precision of IT systems means the difference between winning or losing customers, keeping supply chains profitable, and solidly translating new concepts into revenue-producing products and services.  The world’s best-run services businesses have customer-driven IT as part of their DNA; it is very much who these companies are internally.

In the recently published Garter report CEO and Senior Executive Survey 2013: 21 Top Companies Admired for Competitive IT  completed between October and December, 2012, which was part of the 2013 CEO and Senior Business Executive Survey, C-level respondents were asked to name the companies they most admired in terms of their ability to apply IT-related business capabilities for competitive advantage.   Respondents were also asked to limit their responses only to their own and related industries.

391 respondents participated in the survey with 147 being CEOs, 149, CFOs; 49, COOs; and 46 being board members including Chairman of the board and president.  Geographic distribution included 152 respondents from North America; 124 from Europe; 78 from Asia/Pacific; 20 from Brazil; 12 from South Africa; and 5 from the Middle East with minimum company size being $250M in annual sales or above.

The following is the list of the world’s most admired companies using IT for competitive advantage.

Most Admired Companies Making IT A Competitive Advantage

Accenture
Amazon
Apple
Cleveland Clinic
General Electric
Goldman Sachs
Google
Hospital Corporation of America
IBM
Intermountain Healthcare
JP Morgan Chase
Kaiser Permanente
Mayo Clinic
Microsoft
Nestle
Proctor & Gamble
Progressive Insurance
Schlumberger
Target
Toyota
Wells Fargo

Key Take-Aways

• Customer-driven IT is the single most admired trait of all 21 companies in the list.  Associated with this attribute is the proven ability of these enterprises to manage complex e-commerce systems & platforms, support multichannel management, in addition to continually show the ability to innovate quickly.

• Enterprises need to consider how the business successes their investments in  IT are enabling can be used for branding and recruitment.   Providing benchmark performance data and stories of how IT helped create entirely new markets and solve customer problems needs to be used for recruiting.  Many of the 21 companies mentioned are doing this, using success stories as a catalyst for driving recruitment efforts for analytics, cloud computing and systems integration experts.

• Don’t underestimate the disruptive power of cloud computing and mobility to completely re-order enterprise systems quickly.  Gartner mentions that there are enterprises whose IT organizations would have made the list had they not slowed down.  While not directly stated, Gartner warns IT departments to not become complacent over time.  From personal experience working in IT departments however, it is clear that complacency is a leading career hazard.  It’s imperative for CIOs to keep challenging their organizations to stay intensely focused on new developments, seeking out how they can be used to strengthen business strategies.

• Four of the top five factors that most impressed respondents about the admired companies are customer-related.  Customer-facing IT (15%); followed by an integrated/standardized/unified IT organization and process framework (13%); exceptional use of CRM (11%); customer-centered innovation (9%);  and product design & offerings (9%) are the most mentioned attributes of the highest-performing companies. Multiple responses were allowed to this area of the survey.  The following graphic provides an analysis of which factors most impressed the C-level executives who were respondents to the survey.

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 18^th.

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.

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: http://hal.archives-ouvertes.fr/docs/00/65/73/06/PDF/RR-7838.pdf

Having worked at a start-up selling hosted accounting and finance applications to small and medium businesses, I’ve seen first-hand how demanding these professionals can be.  And rightly so, the system of record they manage keeps their businesses financially strong and growing.  Intacct is one of the companies I’ve tracked for the last few years in this area, and I recently had a chance to speak with their CEO, Robert Reid.

While there are many cloud financial management and accounting companies creating interesting products and winning customers, Intacct is unique.   Rob has infused a passion for customer centricity into the company along with a mindset of continual innovation in their applications’ user experience.  Rob is a longtime veteran of the enterprise software industry, having served previously as CEO of LucidEra and previous to that, group vice president of Siebel CRM On Demand for Oracle Corporation managing the SMB sector.  He also served as president and CEO of on-demand CRM innovator UpShot, where Rob grew the company tenfold before it was acquired by Siebel.  He is also one of the executive founders of Documentum.  You can find his LinkedIn profile here.

I recently had a chance to speak with Rob regarding his perspective on cloud computing in general and regarding Intacct’s business specifically.  Here’s a transcript to my interview with him:

What are the three biggest challenges you see to Intacct’s growth over the long-term and how will you and the management team address them?

Our biggest challenge by far is finding great people.  People who are curious,  people who want to learn and continually grow while also being customer-centric.  We’re looking for great people with these attributes and those who want to do rewarding, challenging work.  That’s a high priority for us today.

Second, we’re looking to add more partners who have expertise in accounting and finance to grow along with us and help customers anticipate what they need to do today and in to the future to deliver value to their organizations .

Third, anticipating the growth of the business and being able to effectively plan for the pace and direction of change is critical to us.

SaaS-based applications have proved themselves very well in small and medium businesses.  How and why are small businesses adopting SaaS-based accounting and finance systems today?  How is this going to change in the future?

We’re seeing usability and excellent customer experience designed into cloud applications being essential for the growth of our business.  In fact we’ve done intensive studies of how our customers can save time and be more productive with greater usability improvements, quickly released into our applications.

Intuitive design of application workflows, in accounting and finance, is another key success factors we’re seeing today.  This is leading to a consumerization of financial management systems.

Accounting and financial professionals are after greater visibility into their financials.  Analytics and modeling from an accounting perspective is also a high priority for our customers today.  The 21rst century CFO needs to have these analytics and modeling tools with real-time data to do their jobs, and we’re very focused on delivering them.

A critical success factor for any SaaS-based accounting system is the ability to integrate with 3^rd party systems and also migrate legacy data.  Can you speak to this aspect of your company’s product and service strategy, and what your plans are in this area going forward?

Our architecture includes Open Application Programmer Interfaces (APIs) that simplify the complexity of integrating with homegrown, legacy and 3^rd party databases and systems.  Over the last decade we’ve fine-tuned these APIs, publishing them free for our customers.  We’ve learned much from listening to our customers, continually fine-tuning APIs to stay in step with their needs.  Our APIs are making it possible for our systems to have inbound and outbound data from systems throughout our customers’ businesses creating a reliable system of record.

With SaaS it’s possible to accelerate the release cycles to any pace a company chooses.  Right now Intacct is committing to four major releases a year.  Are there plans to accelerate the release cycle and do more?

We’re staying with four major releases a year out of respect for the change management aspects of our customers.  Doing releases more often than that would force our customers to continually be educating their accounting, finance, reporting and services teams of new features.  We do make tens of smaller releases a year to incrementally add features customers ask for.  And our customers can choose to enable these features as they are added to our applications.  We are finding that balance between agile development and quality assurance of configurable features, while striving to make usability and the user experience  paramount.

Much has been said regarding single tenancy and multi-tenancy. Can Intacct customers choose between these options?  Is there a price premium for choosing one over another?

We are exclusively multi-tenant as it makes the most sense for our customers economically.  If a customer chooses a single-tenancy solution it takes a ton of time from an operations team to run it; so it ends up being a bad economic model for the company.  Since the hardware, and resources aren’t being shared, a single tenant system ends up being the most expensive way to go. There is a tremendous amount of cloud washing going on out there, where software companies and providers are trying to put a glow on old technology by calling it single tenancy, when it is really just a hosted version of that old application. It is important to choose a cloud system that was built from day one to be in the cloud and deliver tremendous value.

Do you partner with a cloud provider or own your own hosting center?  Are your long-term plans to own your own data centers? 

Our global hosting partner is Savvis.  We manage the servers and have complete control over our Service Level Agreement (SLA) monitoring and reporting.  We’ve also provided every customer with 24/7 transparency into our applications’ stability and reliability.

What percentage of your sales are from North America relative to Europe and Asia?  How do you see this changing in the next three years? 

The majority of our customers are located in the United States, but have on average five locations around the world..  Our multicurrency, multientitiy, and consolidated roll-up features are heavily used by this group of multinational customers.

Intacct has done well selling to accountants and financial professionals, a community known for valuing accuracy, auditability and precision.  How has Intacct been able to both evangelize cloud computing and cloud-based accounting systems to this pragmatic, at times skeptical market segment?  

We’re selling to the 21rst century CFO really well, stressing the need to have real-time visibility into operations and the ability to define metrics and modeling of current and future financial performance of their business.  As we’re selling them more than a system of record, but a system of engagement.  Our approach is to show how they can accelerate their growth as a business with better insights for all of the knowledge workers into their overall performance.

In 2009 the American Institute of Certified Public Accountants (AICPA), and its subsidiary, CPA2Biz, chose Intacct as the only preferred provider of financial applications to CPA professionals and AIPCA members.  Intacct was given an exclusive five year agreement that was extended for another three taking the agreement to at least 2017.  In addition, the International Federation of Accountants (IFAC) has chosen Intacct as their internal accounting and financial management application as well.  Much has been said about the role of trust in enterprise software in general and cloud-based applications specifically.  The AICPA and IFAC have given us the chance to be the trusted solution to customers as a result.

You’ve often said that Intacct is very focused on getting customers back their time.  How are you designing in greater usability and performance improvements to Intacct’s applications to make this happen?

We have a feature called dimensions, which gives our customers the flexibility to create and track the metrics that are specific to their business.  One of the most compelling cases of the value of dimensions is the example of a airplane leasing company that was able to grow their business 30% faster each year based on the increased insights gained.   Using our dimensions capability, the plane leasing company was able to track plane leasing data, track how many times a given plane had been leased, compare costs of other planes and also track the lifetime value of the planes as well.  One of the most fascinating aspects of this analysis is the finding that over time planes initial values drop and then increases  in value, just like a Ferrari.  Using dimensions gave the company the ability to analyze their data in new ways and, in turn, manage their assets more effectively and profitably than ever before.

The Intacct Accountants Program is one of the more unique in the industry.  Can you discuss how your company was successful in recruiting partners, and what your plans are for 2013 and beyond with this program?

This is one the top three strategic initiatives we continue to invest heavily in.  We’ve been able to build a successful program by concentrating on partners with strong accounting domain expertise, excellent command of billing and profitability analysis, and a broad base of accounting and finance expertise.  Our alliance with the AICPA has also helped in making our Accountants Program a success.

Do you use personas as part of your product development, product management and marketing strategies?  Can you comment on them briefly and how they are impacting your approach to product development and marketing?

We use personas extensively throughout our development, marketing and selling strategies.  Our personas include titles and roles, as well as problems and needs.  We also have a Follow Me To Work Program which is invaluable in fine-tuning the usability of our applications.  Intuit pioneered many of the advances in Follow Me Home research programs to fully understand customers’ needs.  We have much of the original Intuit QuickBooks product management and engineering teams working for us today, focusing on how to continually improve usability and our customers’ experiences with our software.

One of the most advanced companies in this area is Wanted Analytics, who aggregates job postings from over 500 job boards and maintains a database of over 600 million unique job listings.  They specialize in business intelligence for the talent marketplace, providing insights into how one company’s salary range compares to competitors for the same position, also calculating the difficulty to hire a given type of candidate.  They’ve developed a unique Hiring Scale to accomplish this.

I recently had a chance to test-drive their analytics applications.  Using the parameters to analyze all cloud computing jobs that pay $100,000 a year or more for the analysis, I ran several queries.  Key takeaways include the following:

•  San Jose-Sunnyvale-Santa Clara, CA leads the MSAs with a salary range $118K to $144K and one of the highest Hiring Score index values of 81, meaning it is very difficult for employers to find candidates who are qualified for their open positions. Bridgeport-Stamford-Norwalk, CT is next with a salary range of $117K to $143K and a Hiring Index Score of 75.  The SMA for San Francisco-Oakland-Fremont, CA shows a salary range of $114K to $140K and a relative high Hiring Scale of 88.  Salary range for cloud computing professionals charted by metropolitan  statistical area (MSA) is shown below:

•  Professional, Scientific and Technical Services (31%), Information Technologies (30%) and Manufacturing (12%) lead the top ten industries hiring cloud computing professionals in positions paying $100K or more. Wanted Analytics uses the NAICS taxonomy to organize this area of their database.

• A total of 5,299 positions are open today for Computer Software Engineers, Applications and Architects as is shown in the following graphic.  What is surprising is the rapid increase in Marketing Managers (1,076 positions),  Sales Representatives, Wholesale and Manufacturing, Technical and Scientific Products (576 positions) and Sales Engineers (452 positions).   Wanted Analytics uses the Standard Occupational Classification (SOC) taxonomy too organize this area of their database.  The results are shown in the graphic below:

The US Technology M&A insights: Analysis and Trends in US Technology M&A Activity 2013 provides an excellent overview of merger, acquisitions, private equity, divestures, cross-border transactions across the five key industry sectors.  The report, free for download, covers the Internet, IT Services, hardware and networking, software, and semiconductor sectors.

Enterprise Software Players: In Search of Sticky Revenue and Higher Margins

The major catalysts driving cloud deals forward in 2013 are enterprise software companies’ need to redefine their business models and find sources of sticky revenue that can replace for many of them, dwindling maintenance revenue streams.  Knowing that the annuity model of cloud computing works best with multiyear payments required at the beginning of a customer engagement, enterprise software companies are looking to strengthen this area of their product portfolios.  Third, the faster cloud acquisitions can be integrated into their legacy systems, the more upsell can be achieved with their large installed bases of customers.  The greatest challenge many of them face however is selling entirely new cloud applications to entirely new customers they’ve never sold to before.  The potential of these entirely new markets however is going to be a valuation multiplier in 2013 and beyond.

Here are the key take-aways from PwC’s report:

• Software and Internet deals represented 57% of transactions closed in 2012, a figure that PwC has seen steadily grow over the last two years. Cumulative value for software and Internet deals represented 53% of total 2012 deal value, an increase from 51% in 2011. Software deals represented over a third of 2012 technology deals, generating 35% of deal volume and 36% of deal value for the year   A comparison of both years and technology sectors are shown in the following graphic:

• PwC takes a cautionary, conservative tone in this report showing how overall IT spending growth finished the year at an anemic 1.2% while technology deal volumes and values dropped by just under 20% from the prior year.
• The report cites Gartner and Forrester’s optimistic IT spending forecasts for IT growth predicting a recovery in 2013 followed by accelerating growth in 2014 according to Forrester.
• PwC is seeing SaaS, mobile devices, analytics and Big Data as the drivers of current and future M&A growth and a fundamental shift in deal volumes to software and Internet deals based on these technologies.  The report says the most promising areas of M&A activity in 2013 are mobile application development start-ups who have the intellectual property it would take years for enterprise software companies to create on their own.
• Analytics will move from being a differentiator to the cost of doing business, a key point made in the PwC analysis.  PwC claims that analytics M&A will accelerate across all enterprise software vendors as they seek to fill gaps in their product and service strategies, and position themselves for growth in specific areas of the emerging industries using Big Data.
• PwC reports that monthly deal volumes for software remained relatively even throughout 2012, hovering at 8-9 transactions per month and averaging just over 20 per quarter. The average deal value of $433M for 2012 was slightly lower than 2011 levels of $438M but an increase in the number of deals in excess of $500M helped to keep average deal values high. The report also shows how 2012 saw 18 deals (21% of volume) in excess of $500M closed, the majority of which closed in the latter half of the year. Fourteen deals greater than $1B closed in 2012, an increase of 8 deals (133%) over 2011.  The following is a graphic comparing software sector deals by volume and value:

 Bottom line: The land grab is on for intellectual property in the fields of mobile application development, analytics and cloud computing as enterprise software vendors look to fill gaps in their product and service strategies.

Keeping that culture strong and focused on the customer takes a unique leader that consistently earns trust and respect.  Those are the qualities I think of whenever I’m asked to recommend the best cloud computing companies to work for.  Using the scores from Glassdoor.com I’ve put together the table below comparing cloud computing companies and when available, the percentage of employees who approve of their CEO.

If you’re not familiar with Glassdoor, it’s a website that gives employees the chance to rate their companies and CEOs anonymously, along with reporting salaries.  Friends in the Human Resources community tell me it’s an effective recruitment site as well.

Cloud computing companies are sorted based on the percentage of employees would recommend their company to a friend.  I added in CEO scores to get a sense of which companies have a significant gap between morale and the perception of the CEO.  As of today according to employee rankings, Microsoft has the largest gap between percentage of employees who would recommend the company to a friend (77%) and  CEO rating (48%).

The highest rated CEOs you’d want to work for based on their Glassdoor ratings are as follows, with their ratings shown as of today:

Jyoti Bansal of AppDynamics (100%)

Drew Houston, Dropbox (100%)

Aneel Bhursi, Workday (100%)

Scott Scherr, Ultimate Software (97%)

Jim Whitehurst, Red Hat (97%)

Larry Page, Google (95%)

Aaron Levie, Box (94%)

Marc Benioff, Salesforce (93%)

Tom Georgens, NetApp (92%)

Mark Templeton, Citrix Systems (91%)

Bill McDermott & Jim Hagemann Snabe, SAP (90%)

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, Salesforce.com, 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.

• 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.

• 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.

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:

• Global spending on public cloud services is expected to grow 18.6% in 2012 to $110.3B, achieving a CAGR of 17.7% from 2011 through 2016. The total market is expected to grow from $76.9B in 2010 to $210B in 2016. The following is an analysis of the public cloud services market size and annual growth rates:

• Gartner predicts that Infrastructure-as-a-Service (IaaS) will achieve a compound annual growth rate (CAGR) of 41.3% through 2016, the fastest growing area of public cloud computing the research firm tracks.  The following graphic provides insights into relative market size by each public cloud services market segment:

• Platform-as-a-Service (PaaS) will achieve a 27.7% CAGR through 2016, with Cloud Management and Security Services attaining 26.7% in the same forecast period.  Software-as-a-Service’s CAGR through 2016 is projected to be 19.5%.  The following graphic illustrates the differences in CAGR in the forecast period of 2011 – 2016:

• Gartner is projecting the SaaS market will grow at a steady CAGR of 19.5% through 2016, having increased the forecast slightly (.4%) since its latest published report.  Global SaaS spending is projected to grow from $13.5B in 2011 to $32.8B in 2016.

• CRM will continue to be the largest global market within SaaS, forecast to grow beyond $5B in 2012 to $9B in 2016, achieving a 16.3% CAGR through 2016.   The highest growth segments of the SaaS market continue to be office suites (49.1%), followed by digital content creation (34.0%).  The following graphic rank orders CAGRs across all public cloud services segments from the forecast period:

• 59% of all new spending on cloud computing services originates from North American enterprises, a trend projected to accelerate through 2016.  Western Europe is projected to be 24% of all spending.  A graphic comparing total spending by geography and corresponding growth rates is provided below:

• The following tables provide insights into each category of public cloud computing spending throughout the forecast period.  Please click on the tables to expand them for easier reading.

Source:  Forecast Overview: Public Cloud Services, Worldwide, 2011-2016, 4Q12 Update Published: 8 February 2013.

Nearly every manufacturing company I’ve spoken with in the last ninety days has a mobility roadmap and is also challenged to integrate existing ERP, pricing and fulfillment systems into next-generation selling platforms.

One of the most driven CEOs I’ve met in manufacturing implemented a cloud-based channel management, pricing, quoting and CRM system to manage direct sales and a large distributor network across several countries.  Manufacturers are bringing an entirely new level of pragmatism to cloud computing, quickly deflating its hype by pushing for results on the shop floor.

There’s also been an entirely new series of enterprise software and cloud computing forecasts and market estimates published.  I’ve summarized the key take-aways below:

• Enterprise sales of ERP systems will grow to $32.9B in 2016, attaining a 6.7% CAGR in the forecast period of 2011 to 2016.   CRM is projected to be an $18.6B global market by 2016, attaining a CAGR of 9.1% from 2011 to 2016.   The fastest growing category of enterprise software will be Web Conferencing and Team, growing at a 12.4% CAGR through the forecast period.  The following graphic compares 2011 actual sales and the latest forecast for 2016 by enterprise software product category.  Source:  Gartner’s Forecast Analysis: Enterprise Application Software, Worldwide, 2011-2016, 4Q12 Update Published: 31 January 2013

•  Enterprise application software spending will reach $158B by 2016, with 20.8% being spent on ERP systems, 13.4% for Office Suites and 11.7% on CRM.  The following table breaks out spending by category and CAGRs for 2011 – 2016.  Gartner is projecting that 38% of revenues in the forecast period will be from maintenance revenues, 17% from subscription payments.  Source:  Gartner’s Forecast Analysis: Enterprise Application Software, Worldwide, 2011-2016, 4Q12 Update Published: 31 January 2013

• Cisco is forecasting cloud spending in small and medium busineses (SMB) will reach $16B in 2015 growing from just under $5B in 2010.  The company has published two studies on SMB cloud adoption that are worth reading.   Source: SMB Public Cloud Adoption: Opening a Hidden Market Source: http://www.cisco.com/web/about/ac79/docs/sp/IBSG_RE_SMB-Public-Cloud-Adoption.pdf Sequel: http://www.cisco.com/web/about/ac79/docs/re/IBSG-RE_SMB_Cloud-Adoption_Sequel.pdf

•  SaaS and cloud-based business application services revenue will grow from $13.5 billion in 2011 to$32.8 billion in 2016, achieving a  five-year CAGR of 19.5%. Source:  Gartner’s Forecast Analysis: Enterprise Application Software, Worldwide, 2011-2016, 4Q12 Update Published: 31 January 2013

• By 2014, IT organizations in 30% of Global 1000 companies will broker (aggregate, integrate and customize) two or more cloud services for internal and external users, up from 5% today.   Source:  Predicts 2013: Cloud Computing Becomes an Integral Part of IT Published: 4 December 2012 ID:G00230929.

• In 2012, 36% of CRM applications in the CRM software market were delivered on software as a service (SaaS) infrastructure. Gartner forecasts that SaaS use will increase to 40% in 2013, and that the crossover point to more than 50% SaaS in the CRM market will be reached during 2016.  Source: Predicts 2013: CRM Goes More Cloud, Becomes an App, Has a New Leader and Changes Nam Published: 4 December 2012.

• SaaS-based CRM will grow three times as fast as on-premises solutions. The compound annual growth rate (CAGR) for all CRM software is forecast to be 9.1% from 2012 through 2016, and 15.4% for SaaS-delivered CRM during the same period. Source: Predicts 2013: CRM Goes More Cloud, Becomes an App, Has a New Leader and Changes Nam Published: 4 December 2012.

• Gartner predicts worldwide spending on Platform-as-a-Service (PaaS) will grow from $1.58B in 2013 to $3.05B in 2016, attaining a 17.9% CAGR.   Software-as-a-Service (SaaS) will grow from $19.8B in 2013 to $32.8B in 2016, attaining a 13.4% CAGR.  Infrastructure-as-a-Service (IaaS) will grow from $9B in 2013 to $24.2B in 2016, attaining a 28.02% CAGR.  Gartner’s latest public cloud computing forecast is provided below. . Source: Public Cloud Services End-User Spending by Segment for Region, 2010-2016 (Millions of Dollars)  Source: Gartner (December 2012)  Please click on the image to expand it for easier reading. 

 

•  In the latest Forrester Wave™: Enterprise Cloud Databases, Q4 2012, Microsoft, Amazon RDS, Amazon DynamoDB and Database.com were ranked market leaders.   Source and free downloadable reprint, courtesy of Microsoft:  The Forrester Wave™: Enterprise Cloud Databases, Q4 2012

• IDC is predicting Cloud Services and enablement spending will hit $60 billion, growing at 26% through the year and that over 80% of new apps will be distributed and deployed on cloud platforms.  Their predictions also are saying that 2.5% of legacy packaged enterprise apps will start migrating to clouds.  Source: Top 10 Predictions, IDC Predictions 2012: Competing for 2020 by Frank Gens. You can download a copy of the IDC Predictions here: http://cdn.idc.com/research/Predictions12/Main/downloads/IDCTOP10Predictions2012.pdf