Alan Kay’s saying that the best way to predict the future is to create it resonates through the best cloud computing and enterprise software predictions for 2014. Constraints that held start-ups back from delivering sophisticated new apps and services are disappearing fast. The dynamics of one of my favorite books, The Innovator’s Dilemma by Clayton Christensen, are in full force across the cloud and enterprise landscape.
There are many predictions being generated right now and instead of writing yet another set, I’m providing a listing of those that are the most interesting and thought-provoking. They are listed below:
- 10 Cloud Computing Predictions for 2014 – In-depth analysis of ten predictions including how more companies will realize they are really in the software business, private cloud computing having a moment of truth and continued adoption of cloud brokerages. This set of predictions is an interesting read and provides useful insight. I’d just add that as application developers go, so goes an industry, a point Bernard Golden refers to in this post.
- Analytics Eats the World in 2014 – George Mathew of Alteryx is one of the most driven people I’ve ever met about analytics programming and development. He’s very focused on breaking down constraints that hold analysts back from getting more value from their data. His predictions provide insight into how business analysts’ roles are changing based on rapid advances in analytics app development, model development and use.
- Changing Cloud Scapes in 2014 – Jeff Kaplan, Managing Director of THINKstrategies provides ten insightful predictions regarding the continued adoption of cloud computing platforms in the enterprise. His fourth prediction, “Although horizontal cloud solutions will continue to experience significant growth, vertical market solutions aimed at specific industries will grow even more rapidly” is starting to emerge today. The recent success of Veeva Systems supports his prediction and points to next year seeing more vertical market solutions being successfully launched.
- Cloud computing experts forecast the market climate in 2014 – Excellent summary of seven cloud computer experts’ predictions for 2014 including Mark Eisenberg, Roger Jennings, Paul Korzeniowski, David S. Linthicum, Tom Nolle, Dan Sullivan and Mark Szynaka. Highlights include IDC analysts predicting the “Over the 2013 to 2017 forecast period, public IT cloud services will have a compound annual growth rate [CAGR] of 23.5%, five times that of the IT industry as a whole,” and PaaS will lead IaaS and SaaS with a CAGR of 29.7%. What’s useful about these set of predictions is the breadth of expertise reflected in market statistics, market and technology projections and insights shared.
- My One Big Fat Cloud Computing Prediction for 2014 – I have been following the industry analysis, writing and research of Joe McKendrick for years based on the excellent insight he provides. Joe predicts that cloud computing is set to become mainstream computing, period. He cites Cisco’s research showing the majority of data center will be cloud-based and shares his perspective of the market. Joe has an innate sense of how enterprises adopt and use technology and this post reflects that expertise.
- SaaS predictions for 2014 – Chris Kanaracus is predicting that multitenancy will fade away as a major concern in SaaS, geographic depth of coverage will accelerate with cloud vendors announcing new data center openings around the world, and more vertical market adoption of SaaS. He also prefaces his predictions with the Gartner forecast for SaaS (software as a service) quoting their figures of the total market will toping $22 billion through 2015, up from more than $14 billion in 2012.
- Top Predictions about Software Companies in 2014 – In-depth analysis and predictions of which companies are going to be the most interesting to watch in 2014 and predictions regarding the enterprise software landscape. This post provides a great overview of how industry veterans see enterprise software changing as a result of cloud computing as well.
- Troubling, Challenging 2014 ERP Predictions – Brian Sommer’s predictions are the most thought-provoking and honest of any written so far this year. He writes “for an ERP vendor to sell CX (customer experience) software and then mistreat their own customers so badly is more than ironic (or moronic). It’s a death wish. Yet, it happens.” If there is only one set of predictions you read from this list, be sure to read this set.
- What Should CMOs Do In 2014? IDC’s Top Ten Predictions – Gil Press provides in-depth analysis of IDC’s predictions of how the role of CMO will change in 2014. He’s summarized the key points of the recent webinar including market forecasts from IDC, providing his insight and expertise in this post. IDC is predicting that digital marketing investment will exceed 50% of total program budget by 2016, up from 39% in 2013 and that by the end of 2014, 60% of CMOs will have a formal recruiting process for marketers with data skills.
One of the most common questions I get from students is where they can find free cloud computing and enterprise software research.
Few if any of my students work for companies who have subscriptions with the top analyst firms however. A small group of students are working on a start-up on the side and want to absorb as much market data as they can.
Many of my former students are also in IT management roles, and when they become interested in a specific cloud computing or enterprise topic over time, they write me and ask if I have any data on their subject of interest. I keep the following list updated from them too. To serve all these students I’ve been adding to the list shown below for a number of years. None of these companies are current or past clients and I hold no equity positions in any of them.
The requests are so prevalent in global competitive strategy courses I distribute this list at the beginning of the semester with the following disclaimers.
- Many of the cloud computing and enterprise software companies pay to have white papers written and research done. Writing white papers and doing research for an enterprise software vendor client is a very lucrative business for many industry analyst firms. Ethical industry analysts will often insist that a disclaimer be included in the white paper and on the website stating that they and their firms were hired to write the paper or do the research and publish the report.
- The reports are intellectual property of the firms publishing them. Enterprise software vendors often pay tens of thousands of dollars at a minimum for reprint rights and the right to provide them on their websites. I advise my students to seek out the copyright and quote policies of the research firm of interest if they plan on re-using the graphics in any published materials or in their blog posts. One for example, the Gartner Copyright and Quote Policy is shown here.
- Pay attention to the methodologies used in each report and realize they change over time. This is especially the case with the Gartner Magic Quadrant and MarketScopes. Gartner has been very active this year in refining the Magic Quadrant methodology for example.
The following are the list of cloud computing and enterprise software vendor sites that offer free downloads of cloud computing and enterprise software research:
- Amazon Web Services – Amazon has purchased re-print rights to the Gartner Magic Quadrant for Cloud Infrastructure as a Service written by Lydia Leong, Douglas Toombs, Bob Gill, Gregor Petri, Tiny Haynes published on August, 19, 2013 in addition to the latest reports from Forrester on enterprise public cloud platforms and enterprise cloud databases. Link: https://aws.amazon.com/resources/analyst-reports/
- BMC Software – Many free reports from Gartner, Forrester, The 451 Group and other research firms covering advanced performance analytics (APA), cloud computing, IT Service Management and long-term technology trends. Link: http://www.bmc.com/industry-analysts/reports/
- Computer Associates – An extensive collection of cloud computing and enterprise software research organized into the following categories: cloud; data management; energy and sustainability management; IT automation; IT security; IT service management; mainframe; project and portfolio management; service assurance and virtual organizations. CA requires opt-in on the latest research as they use this site as part of their lead generation strategy. Link: http://www.ca.com/us/collateral/industry-analyst-reports.aspx
- Cisco Systems – Data Center and Virtualization; includes the latest Current Analysis, Forrester, Gartner, IDC, Lippis and Yankee Group research reports covering Big Data, blade servers, cloud computing, Hadoop, unified data centers and many other topics. Be sure to click across the Computing, Network, Orchestration/Automation, and Network Services tabs to find additional research: Link: http://www.cisco.com/en/US/solutions/ns340/ns857/ns156/ns1094/analyst_reports.html
- Hewlett-Packard – HP has invested primarily in networking-related analyst research including the latest studies and market frameworks from Forrester, Gartner, IDC and Infonetics Research. Link: http://h17007.www1.hp.com/us/en/networking/ar/index.aspx#.Uhp-ERufg-J
- Intel – Organized around the topic of designing a data center for the cloud, Intel is providing a series of research studies, reports, white papers and videos that provide insights into virtualization, networking, mobility and Intel-based servers running cloud architectures. Link: http://www.intel.com/content/www/us/en/cloud-computing/cloud-computing-analyst-reports.html
- Microsoft – Balancing the need to support their enterprise applications today and create demand for cloud-based initiatives now and in the future, Microsoft’s series of analyst reports reflect their evolving business model. Microsoft has licensed the latest research from Enterprise Strategy Group (ESDG), Forrester, Gartner, IDC, Ovum, Yankee Group and others listed on this site. Link: https://www.microsoft.com/en-us/news/itanalyst/
- Oracle - The most comprehensive collection of industry analyst research online for any enterprise software vendor, Oracle has hundreds of research reports available for viewing under their reprint licenses for free, and also for download. The reports are organized into corporate, infrastructure, systems, services, solutions, industries, enterprise applications and regions. Link: http://www.oracle.com/us/corporate/analystreports/index.html
- Progress Software – Extensive collection of research from Bloor, Forrester, Gartner, IDC, Tabb Group, Ovum and other research firms are available for download from this site. Link: http://www.progress.com/en/inthenews/analyst-reports.html
- SAS – The most extensive and well-organized online collection of analyst research on analytics and business intelligence (BI) available, SAS makes research available from fifteen analyst firms across six industries on this area of their website. You can find the SAS Analyst Viewpoints section of their website here: http://www.sas.com/news/analysts/
- Symantec – Provides downloadable analyst reports in the areas of risk and compliance, endpoint security and management, information and identity protection, messaging security, backup and archiving, storage and availability management, services and emerging trends. ESG, Info-Tech Research Group, Forrester, Gartner and IDC reports are on this page for download. Link: http://www.symantec.com/about/industryanalysts/analystreports.jsp
- Teradata – Extensive collection of industry analysis and research organized into the sections of Active Data Warehousing, Active Enterprise Intelligence, Enterprise Data Warehousing, Teradata Analytical Ecosystem and Teradata Integration Analytics. The latest market frameworks from Gartner, Forrester, IDC and other research firms are available for download. Link: http://www.teradata.com/analyst-reports/
What sets apart the fastest-growing small businesses is their an innate strength at turning data and information into results.
It’s becoming easy to spot a smaller business who is going to break out and grow quickly. They often have these qualities: they highly value knowledge, expertise and speed over seniority or cronyism; they have successfully managed a geographically distributed supply chain, production and service operations early in their history; and long before they reach $20M in sales they have learned how to balance domestic and international customer demands. In short, they learned fast how to compete and win business globally.
Over the last several months research firms and enterprise software vendors have released studies on cloud computing adoption in small & medium businesses (SMBs).
The following are the key take-aways from these studies:
- Forrester forecasts that channel partners will increase their reliance on cloud software and services from 22% to 27% from 2013 to 2014. The majority of this growth will be in SMBs. For additional details please see the free reprint of the report, Cloud Channel Trends, 2013 To 2014 by Tim Harmon and Jonathan Silber, February 28, 2013. You can download the reprint here (no opt in required): http://www.forrester.com/pimages/rws/reprints/document/90001/oid/1-LMIK8X
- 61% of SMBs who responded to a recent survey are using cloud-based solutions today, with an additional 5% planning to add cloud services in the next six months. 69% of SMBs with fewer than 20 employees and 55% of SMBs with 250 to 999 employees are using cloud-based applications today. North American SMBs are more likely to use cloud-based applications co these services than EMEA (64% compared to 56%). Source: State of SMB IT 1H 2013 Semi-Annual Report On Small And Midsize Business Technology Plans & Purchase Intent (Opt-in required): http://www.spiceworks.com/marketing/state-of-smb-it/ The following is a graphic from the report:
- SMB spending on cloud solutions will grow by almost 20% over the next five years, with 3 in 10 midsize firms adopting public cloud solutions. IBM is offering a free download of the IDC report, Cloud Computing in the Midmarket: Assessing the Options in 2013 (no opt-in required): http://idcdocserv.com/995 IDC’s graphical definition of how their Primary Market and Secondary Market IT Product Taxonomy maps to the NIST Taxonomy is shown below:
- Cisco predicts the U.S. SMB commercial-services market addressable by service providers will grow to more than $200B by 2015. Also included is an analysis of how fundamental differences in business segments drive IT behavior, as the following table illustrates. Source: What Do SMBs Want from Commercial-Services Providers? Insights from Cisco’s U.S. Research on SMB Services Delivery Link:http://www.cisco.com/web/about/ac79/docs/sp/SMB-Cloud-Survey.pdf. Please click on the image to expand it for easier reading.
- Hosting and cloud services provider Parallels projects that the worldwide SMB SaaS applications market was $14.5B in 2012 today and will grow to $33.8B by 2015, attaining a 32% Compound Annual Growth Rate (CAGR). Please see the following illustration of a breakdown by region over the forecast period. Source: Profit from the Cloud 2013 Global Parallels Global SMB Cloud Insights Opt-in required, Link: http://www.parallels.com/fileadmin/parallels/documents/smb-reports/2013/2013_SMB_Brochure_Global_web.pdf. Please click on the image to expand it for easier reading.
- SMEs overwhelmingly prefer to buy or acquire these critical systems (43%) rather than lease or pay for use (23%) in an SAP-sponsored survey by Oxford Economics. The study found that the tools most commonly used by SMEs are business management software (48%), mobile (46%), and analytics (44%). Cloud computing adoption is expected to jump from 35% to 47% in three years. An infographic summarizing the results is below. You can get the survey results here: http://cdn.news-sap.com/wp-content/blogs.dir/1/files/SAP-SME-analysis-presentation.pdf . Please click on the image to expand it for easier reading.
It’s time to strip away the hype surrounding analytics, big data and cloud computing by asking how these technologies contribute to excellent customer experiences and greater customer engagement. Those are the real catalysts of market growth and the greatest disruptive forces at work in enterprise software today.
Filtering forecasts of future technology adoption with a customer experience and engagement mindset is essential for separating hype from reality. Two excellent blog posts were published today that provide useful insights for doing this. Ray Wang’s Monday’s Musings: 10 Mega Business Trends To Watch For In 2012 provides pragmatic, insightful analysis of the progression going on from transactional to personal fulfillment systems. Many of the CIOs I’ve met with in the last two months are saying exactly what Ray has written regarding this transition. Paul Greenberg’s CRM 2012 Forecast – The Era of Customer Engagement – Part I delivers more insight than any of the financial or industry analyst reports I’ve read in the last twelve months on CRM and its intersection to social networks. He has defined customer engagement so thoroughly I am sure this post will be a classic, referenced for years to come. Both posts provide an excellent framework to evaluate the upcoming wave of new forecasts due out from research firms at the start of 2012.
Having recently read Forrester’s US Tech Market Outlook For 2012 and applying the concepts Ray Wang and Paul Greenberg discuss, here are several take-aways from that report:
- Total U.S. ICT market in 2011 was $962B with the majority being generated from software sales ($208B) followed by Telecom Services ($199B) and IT Consulting and Systems Integration Services ($188B). The following graphic illustrates the purchase of ICT product and services in the U.S. during 2011. As enterprise software companies are striving to deliver what Ray Wang is calling Experiential Systems, the majority of their core Intellectual Property (IP) was obtained from building Transactional Systems. Despite this conflict, software development methodologies including Agile give the industry a fighting chance at growth in 2012.
- Software continues to dominate both in total revenue ($208B) and growth rate, with 8.2% growth projected for 2012. In addition to analytics and Business Intelligence (BI), Forrester is predicting an increase in ERP, Middleware and SaaS-based application growth.
- Forrester is most optimistic in their forecasts for analytics, BI, Cloud Computing and Smart Computing. Cloud Computing forecasts at Forrester are indexed to sales levels of NetSuite, RightNow Technologies (Oracle), Salesforce.com, and Ultimate Software. Forrester is claiming these four vendors will generate a 23% increase in revenues in calendar Q1, 2012 over Q1, 2011, increasing and staying constant at 24% year-over-year growth from Q2 to Q4, 2012 relative to Q2 to Q4, 2011. Salesforce.com could accomplish this level of growth through acquisitions alone. They’re showing they can integrate newly acquired companies faster than Oracle, who they are challenging for global CRM market leadership in the 2012 – 2013 timeframe. When customer experience and engagement is taken into account, the forecast seems high. Salesforce knows how to translate trial users into customers. The question is can they do this fast enough in 2012 throughout the enterprise and mid-tier accounts to keep up their sales growth on track while reducing churn and increasing profitability.
- Smart Computing is defined by Forrester as platform technologies including specialized analytics, BI, service-oriented architecture (SOA) infrastructure, virtualization software, rules engines, and awareness-based technologies. Forrester is very optimistic about this area with a growth rate second only to cloud computing. Its index of the market is based on Informatica, Pegasystems, and Tibco Software. Forrester is predicting in calendar Q1, 2012 there will be 16% growth over Q1, 2011, followed by consistent 13% growth year-over-year for Q2 to Q4, 2012 relative to 2011. The following graphic compares growth of both Cloud Computing and Smart Computing.
- The inflexion point of Smart Computing will happen when analytics, BI and awareness-based technologies including RFID can be used to make customer experiences consistently positive and drive cultural change throughout a business to center on customers’ expectations. Paul Greenberg refers to this area of customer engagement in his blog post. I agree with him and see the real value of analytics not for reporting, but for being a barometer of just how customer-centric and focused on delivering exceptional customer experiences a company is becoming.
- In 2012, financial services, professional services, and manufacturing will be the three industries that dominate software purchases. Financial services (19%), professional services (15%) and manufacturing (14%) will be the largest buyers of enterprise software. Forrester believes that ERP replacements, supply chain management (SCM) and product lifecycle management (PLM) will all be proprieties in the coming twelve months.
Bottom line: Critiquing high growth technologies based on their contribution to customer experience, engagement and the creation of Customer Lifetime Value (CLV) is what matter most. Hopefully the new wave of forecasts for 2012 and beyond will take the customer – not just technology and statistical extrapolations – into account.
From conservative, single digit adoption rates to hockey-stick projections of exceptional growth, analyst firms, venture capitalists and government ministries are weighing in on how they see cloud adoption progressing.
While each of the adoption rate predictions vary significantly in terms of their methodologies and results, all rely on the assumption that SaaS applications including CRM will continue to gain momentum. The user adoption rates vary on how fast the momentum is, yet all share this assumption. Speed, increased user adoption rates, and the ability to more closely align software to business goals are cited most often as the biggest benefits.
Where the projections vary most is whether enterprises will eventually migrate the majority of their applications to the cloud or not. Forrester, Gartner and others see a hybrid cloud architecture emerging in the enterprise and forcing the issue of legacy systems migration by 2015. As would be expected, vendor-driven research sees an “all or nothing” world in the near future.
Wanting to see how reliable the figures were showing rapid cloud adoption in the enterprise, I did a quick sanity check. Taking the distribution of sales by segment for Salesforce.com and their annual revenue growth rate, then normalizing it across all segments, enterprise emerges as their strongest segment by a wide margin in 2015. It had a 15%+ compound annual growth rate (CAGR) from 2011 – 2015 just taking their current sales by segment distribution of sales and extrapolating forward. Data points like this and the market factors behind them is why SaaS is often used in these studies as a leading indicator of broader cloud adoption.
Adoption Rate Round-Up
- Forrester found that SaaS will outgrow all other cloud services, achieving 37% adoption in 2011 growing to 50% by 2012. In previous studies Forrester has shown that SaaS is a major growth catalyst of ongoing investment in IaaS and PaaS in enterprises. Source: Source: Forrsights: The Software Market In Transformation, 2011 And Beyond Shifting Buying Preferences Lead To New Software Priorities by Holger Kisker, Ph.D. with Pascal Matzke, Stefan Ried, Ph.D., Miroslaw Lisserman Link: http://bit.ly/ijJy70 The following table is from the report:
- Microsoft Global SMB Cloud Adoption Study released in March, 2011 is one of the most comprehensive done this year on this topic. Of the many findings, the study predicts 39 % of SMBs expect to be paying for one or more cloud services within three years). One of the best studies on cloud adoptions done this year Source: Study Results Document (PDF (22 pages): http://bit.ly/gN8yTx
- North Bridge Venture Partners, GigaOM PRO and over a dozen research partners completed the study The Future of Cloud Computing 2011. The study found 13% expressed high level of confidence in cloud computing for enterprise applications, with 40% experimenting and 10% saying they will never use cloud-based platforms as they are too risky. A presentation of the results can be found here:
- Springboard Research (Forrester) completed a study of cloud computing adoption in Asia finding 31% of companies with 50 or fewer PCs will adopt cloud-based applications in 18 months, 56% with up to 500 PCs. The key findings are available for download from the source URL below the infographic.
Microsoft Asia is making this available for download here: http://bit.ly/jWjOj1
- TechTarget published their analysis of virtualization and cloud computing adoption in the study, State of virtualization and cloud computing: 2011. Of the many findings, a few of the most significant is how pervasive VMware ESXi 4 and later (vSphere) is throughout enterprises today. The study also shows that 7% of those interviewed had implemented cloud computing in 2010, growing to 9% in 2011 – quite conservative compared to many of the other adoption rate analyses completed. You can find the results here: http://searchdatacenter.techtarget.com/feature/State-of-virtualization-and-cloud-computing-2011
- Yankee Group has found that in 2011, 41 percent of very large enterprises (more than 10,000 employees) have already deployed or are considering deployment of platform as a service (PaaS) within the next 12 months, compared to just 32 percent in 2010. They have also found that mobility is most significant factor driving cloud adoption in the enterprise. Source: http://professional.wsj.com/article/TPCHWKNW0020110722e77q0004d.html
Forecasting the global public cloud market is growing from $25.5B in 2011 to $159.3B in 2020 in the report Sizing the Cloud, Understanding And Quantifying the Future of Cloud Computing (April, 2011), Forrester Research has taken on the ambitious task of forecasting each subsegment of their cloud taxonomy. Forrester defines the public cloud as IT resources that are delivered as services via the public Internet in a standardized, self-service and pay-per-use way. The aggregate results of their forecasts are shown in the attached graphic.
The forecast range is from 2008 to 2020 and I’ve included several of the highlights from the study below:
- Forrester breaks out Business Process-as-a-Service (BPaaS) in their public cloud taxonomy, not aggregating this area of cloud computing into IaaS or PaaS. This is unique as other research firms have not broken out this component in their cloud market taxonomies, choosing to include Business Process Management (BPM) as part of either infrastructure-as-a-service (IaaS) or platform-as-a-service (PaaS) subsegments. Forrester is predicting this category will grow from $800M in 2012 to $10.02B in 2020.
- SaaS is quickly becoming a catalyst of PaaS and IaaS growth, growing from $33B in 2012 to $132.5B in 2020, representing 26% of the total packaged software market by 2016. Forrester is predicting that SaaS will also be the primary innovative force in public cloud adoption, creating applications that can be tailored at the user level. Forrester is bullish on public cloud growth overall, and their optimistic outlook can be attributed to the assumption of cloud-based applications being configurable at the user level, with little to no enterprise-wide customization required.
- PaaS is forecasted to grow from $2.08B in 2012 to $11.91B in 2020. Forrester is defining PaaS as a complete preintegrated platform used for the development and operations of general purpose business applications. The research firm sees the primary growth catalyst of PaaS being corporate application development beginning this year. By the end of the forecast period, 2020, up to 15% of all corporate application development will be on this platform according to the report findings.
- IaaS will experience rapid commoditization during the forecast period, declining after 2014. Forrester reports that this is the second-largest public cloud subsegment today globally, valued at $2.9B, projected to grow to $5.85B by 2015. After that point in the forecast, Forester predicts consolidation and commoditization in the market, leading to a forecast of $4.7B in 2020.
The following presentation includes an overview of cloud computing adoption trends from Forrester Research, followed by presentations by the Chief Technology Officers of Savvis and Gomez. Taken together, all three presentations shown below provide a realistic assessment of cloud computing adoption and performance.