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Posts tagged ‘IaaS’

Roundup of Cloud Computing Forecasts Update, 2013

tunnel-of-speed-forecast-of-saas-cloud-computing-final-300x201Time-to-market, more flexible support for business strategies by IT, and faster response time to competitive conditions are combining to accelerate cloud computing adoption today.

Of the enterprises I’ve spoken with over the last several months including several Fortune 500 corporations to small businesses just beginning to evaluate cloud-based CRM and manufacturing systems, one message resonates from all of them: they need enterprise applications that keep pace with how fast they want to move on new business strategies. The latest round of cloud computing forecasts reflect the urgency enterprises have of making IT a foundation for strategic business growth.

The following is a summary of the latest cloud computing forecasts and market estimates:

McKinsey Analysis

  • IDC predicts public IT cloud services will reach $47.4B in 2013 and is expected to be more than $107B in 2017. Over the 2013–2017 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. The growing focus on cloud services as a business innovation platform will help to drive spending on public IT cloud services to new levels throughout the forecast period. By 2017, IDC expects public IT cloud services will drive 17% of IT product spending and nearly half of all growth across five technology categories: applications, system infrastructure software, platform as a service (PaaS), servers, and basic storage. Software as a service (SaaS) will remain the largest public IT cloud services category throughout the forecast, capturing 59.7% of revenues in 2017. The fastest growing categories will be PaaS and Infrastructure as a service (IaaS), with CAGRs of 29.7% and 27.2%, respectively.  Source: IDC Forecasts Worldwide Public IT Cloud Services Spending to Reach Nearly $108 Billion by 2017 as Focus Shifts from Savings to Innovation.

IDC Forecast Public IT Spending

  • Informatica’s presentation titled Enable Rapid Innovation with Informatica  and MicroStrategy for Hybrid IT by Darren Cunningham, Informatica Cloud  and Roger Nolan, Informatica Data Integration and Data Quality contains a useful series of cloud market overviews supported by 451 Research Gartner, Forrester and IDC data.  A summary of the statistics section is shown below:

Informatica

adoption graphic from KPMG

  • Gartner predicts that in the next five years enterprises will spend $921B on public cloud services, attaining a CAGR of 17% in the forecast period.  Darryl Carlton, Research Director, APAC with Gartner recently presented Cloud Computing 2014: Cloud Computing 2014: ready for real business?  His presentation is full of insightful analysis and market forecasts from Gartner, with specific focus on Asia-Pacific.
  • Visiongain predicts the Platform-as-a-Service (PaaS) submarket is valued at $1.9B in 2013 growing to $3.7B in 2018, attaining a 14.3% CAGR for the period 2013-2018.  The following figure shows the firm’s forecast.  Source: Visiongain on Slideshare.
  • Gartner predicts that in the next five years enterprises will spend $921B on public cloud services, attaining a CAGR of 17% in the forecast period.  Darryl Carlton, Research Director, APAC with Gartner recently presented Cloud Computing 2014: Cloud Computing 2014: ready for real business?  His presentation is full of insightful analysis and market forecasts from Gartner, with specific focus on Asia-Pacific.
  • Visiongain predicts the Platform-as-a-Service (PaaS) submarket is valued at $1.9B in 2013 growing to $3.7B in 2018, attaining a 14.3% CAGR for the period 2013-2018.  The following figure shows the firm’s forecast.  Source: Visiongain on Slideshare.

visiongain forecast

marketscape

  • Boston Consulting Group writes that SaaS is a $15B market, growing at three times that rate of traditional software.  BCG estimates that SaaS is 12% of global spending on IT applications.  BCG interviewed 80 CIOs and found they were willing to consider SaaS solutions for 35% to 60% of their application spending.  BCG also evaluated how the economics of cloud software adoption vary for on-premises versus SaaS customers.  The following two charts from the completed study. Source: (Free, opt-in required) Profiting from the Cloud: How to Master Software as a Service

Profiting_Cloud_Ex1_lg_tcm80-138310 BCG Categories

Profiting_Cloud_Ex2_lg_tcm80-138309 BCG Economics

Asia Pacific Cloud Market Growth

451 Research: Platform-as-a-Service (PaaS) Fastest Growing Area Of Cloud Computing

public-cloud-computing-forecast-2011-2016The majority of cloud computing revenue in 2012 was generated from vendors with sales over $75M (66%) and who are privately held (77%), with Platform-as-a-Service (PaaS) projected to attain a 41% compound annual growth rate (CAGR) through 2016.

Market Monitor, a service of 451 Research, is also predicting 36% CAGR in cloud computing, growing from $5.7B in 2012 to $20B by the end of 2016 in their Cloud-as-a-Service overview report. Other research firms including Gartner have much higher forecasts for cloud computing in general and IaaS, PaaS and SaaS specifically.

Market Monitor relies on a bottoms-up forecasting methodology that includes revenue analysis and forecasts from 309 cloud-services providers and technology vendors across 14 sectors. Their taxonomy defining Cloud as a Service is shown in the following graphic:

taxonomy cloud as a service

Here are the key take-aways from the report:

  • The cloud computing market will grow from $5.7B in 2012 to $20B in 2016, attaining a 36% CAGR over the forecast period.  The following graphic from the report shows the breakout of revenue on a yearly basis throughout the forecast period.

forecast breakout

  • Platform-as-a-Service (PaaS) will attain a 41% CAGR through 2016, generating 24% of total cloud revenues.  71% of PaaS revenues will be generated by vendors over $75M in sales according to the study.
  • Infrastructure-as-a-Service (IaaS) will attain a 37% CAGR through 2016, generating 51% of cloud revenue.  69% of IaaS revenues will be generated by vendors over $75M in sales according to the study.
  • SaaS will attain a 29% CAGR through 2016 and the distribution of revenue by vendor size shows how fragmented this area of the market is.  The following is a summary table from the report showing distribution of sales by vendor and category.

distribution table

Five Ways CIOs Can Prepare For The Cloud: Lessons Learned From ServiceNow

ServiceNow2ServiceNow (NYSE:NOW) is a global leader in providing cloud-based services used by enterprises to streamline and automate their IT operations.  They’re known for their expertise in IT Service Management (ITSM), speed of development cycles, and commitment to open source including MongoDB and NoSQL.  ServiceNow also has one of the most enthusiastic, rapidly growing and loyal customer bases in enterprise software.  Matt Schvimmer, VP Product Management at ServiceNow, credits the goal of attaining 100% customer referenceability combined with intensive focus on user experience design as contributing factors to their rapid growth, in addition to continuous feedback cycles they use for capturing and acting on customer feedback.

Update from ServiceNow’s Financial Analyst Day and Knowledge13 

On May 13th 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 12th through the 16th.  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, 13th, this concept is shown.  Below is a slide from the February 13th presentation given at the Summit.  You can download the slide deck from the Pacific Crest Emerging Technology Summit here.

ERP for IT

Five Ways CIOs Can Prepare For The Cloud

HS_Arne_Josefsberg (1)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.

The Best Cloud Companies and CEOs to Work For in 2013

???????????????Hiring great people and creating a culture of achievement that is fun, focused and able to get challenging tasks done is not an easy task.

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%).

Glassdoor rankings for cloud computing

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%)

Demystifying Cloud Vendors

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

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

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

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

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

Microsoft Cloud Strategy

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

Oracle cloud strategy

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

SAP Summary Chart

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

Summary Chart

Gartner Predicts Infrastructure Services Will Accelerate Cloud Computing Growth

public cloud computing forecast 2011 - 2016As public cloud computing gains greater adoption across enterprises, there’s an increased level of spending occurring on infrastructure-related services including Infrastructure-as-a-Service(IaaS).  Enterprises are prioritizing how to get cloud platforms integrated with legacy systems to make use of the years of data they have accumulated.  From legacy Enterprise Resource Planning (ERP) to Customer Relationship Management (CRM) systems, integrating legacy systems of record to cloud-based platforms will accelerate through 2016.  I’ve seen this in conversations with resellers and enterprise customers, and this trend is also reflected in Gartner’s latest report on public cloud computing adoption, Forecast Overview: Public Cloud Services, Worldwide, 2011-2016, 4Q12 Update Published: 8 February 2013.  Below are the key take-aways from the report:

  • 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:

Figure 1 Cloud Computing Growth

  • 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:

Figure2

  • 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:

Figure 3

  • 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:

Figure 4

  • 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:

Figure 5

  • 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.

Table 1

Table 2

Table 3

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

Cloud Computing and Enterprise Software Forecast Update, 2012

The latest round of cloud computing and enterprise software forecasts reflect the growing influence of analytics, legacy systems integration, mobility and security on IT buyer’s decisions.

Bain & Company and Gartner have moved beyond aggregate forecasts, and are beginning to forecast by cloud and SaaS adoption stage.  SAP is using the Bain adoption model in their vertical market presentations today.

Despite the predictions of the demise of enterprise software, forecasts and sales cycles I’ve been involved with indicate market growth.  Mobility and cloud computing are the catalysts of rejuvenation in many enterprise application areas, and are accelerating sales cycles.  Presented in this roundup are market sizes, forecasts and compound annual growth rates (CAGRS) for ten enterprise software segments.

Key take-aways from the latest cloud computing and enterprise software forecasts are provided below:

  • Public and private cloud computing will be strong catalysts of server growth through 2015.  IDC reports that $5.2B in worldwide server revenue was generated in 2011 or 885,000 units sold.  IDC is forecasting a $9.4B global market by 2015, resulting in 1.8 million servers sold. Source:  IDC Worldwide Enterprise Server Cloud Computing 2011–2015 http://www.idc.com/getdoc.jsp?containerId=228916 
  • IDC reports that enterprise cloud application revenues reached $22.9B in 2011 and is projected reach $67.3B by 2016, attaining a CAGR of 24%.  IDC also predicts that by 2106, $1 of every $5 will be spent on cloud-based software and infrastructure. Report, Worldwide SaaS and Cloud Software 2012–2016 Forecast and 2011 Vendor Shares, Link: http://www.idc.com/getdoc.jsp?containerId=236184
  • 11% of companies are transformational, early adopters of cloud computing, attaining 44% adoption (as defined by % of MIPS) in 2010, growing to 49% in 2013.  This same segment will reduce their reliance on traditional, on-premise software from 34% to 30% in the same period according to Bain & Company’s cloud computing survey results shown below.  SAP is using this adopter-based model in their vertical market presentations, an example of which is shown here.

  • The global Platform-as-a-Service (PaaS) market is growing from $900M in 2011 to $2.9B in 2016, achieving a 26.6% CAGR.  At this projected rate, PaaS will generate an average of $360M a year in revenue between 2011 and 2016.  Gartner projects that the largest segments will be Application Platform Services (aPaaS) which generated 35% of total PaaS spending in 2011, followed by cloud application lifecycle services (12.5).    Source: Market Trends: Platform as a Service, Worldwide, 2012-2016, 2H12 Update Published: 5 October 2012 ID:G00239236.

  • The three most popular net-new SaaS solutions deployed are CRM (49%), Enterprise Content Management (ECM) (37%) and Digital Content Creation (35%).  The three most-replaced on-premise applications are Supply Chain Management (SCM) (35%), Web Conferencing, teaming platforms and social software suites (34%) and Project & Portfolio Management (PPM (33%). The following graphic shows the full distribution of responses. Source: User Survey Analysis: Using Cloud Services for Mission-Critical Applications Published: 28 September 2012

  •  In 2011, the worldwide enterprise application software market generated $115.1B in revenue, and is projected to grow to $157.6B by 2016, attaining a 6.5% CAGR in the forecast period. Gartner reports that 38% of worldwide enterprise software revenue is from maintenance and technical support; 17% from subscription payments; and 56% from ongoing revenue including new purchases.  An analysis of the ten enterprise software markets and their relative size and growth are shown in the figure below along with a table showing relative rates of growth from 2011 to 2016. Source: Forecast: Enterprise Software Markets, Worldwide, 2011-2016, 3Q12 Update Published: 12 September 2012 ID:G00234766

Forecasting Public Cloud Adoption in the Enterprise

The economics of public cloud computing are accelerating the pace of change occurring in enterprise software today.

Many of the scenarios that Clayton Christensen insightfully describes in The Innovator’s Dilemma are playing out right now in many sectors of this industry, shifting the balance of purchasing power to line-of-business leaders away from IT.  True to the cases shown in the book, new entrants are bringing disruptive innovations that are being successfully used to attack the most price-sensitive areas of the market.  Winning customers at the low-end and making their way up-market, new entrants are changing the customer experience, economics and structure of the industry.  Salesforce.com is a prime example of how the insights shared in The Innovator’s Dilemma are alive and well in the CRM market for example.  This is an excellent book to add to your summer reading list.

Defining The Public Cloud

The National Institute of Standards and Technology (NIST) have defined the public cloud in their latest definition of cloud computing in their September, 2011 brief you can download here (The NIST Definition of Cloud Computing). The NIST defines public cloud as “the cloud infrastructure is provisioned for open use by the general public. It may be owned, managed, and operated by a business, academic, or government organization, or some combination of them. It exists on the premises of the cloud provider.”   In addition the NIST defines three models including Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS).  Gartner’s definition of public cloud computing is comparable yet includes Business Process as a Service (BPaaS) and Cloud Management and Security.

A quick check of the term public cloud on Google Insights shows the rapid ascent of interest in this area.  A graphic from Google Insights is shown below:

Public Cloud Adoption in the Enterprise 

In the many conversations I’ve had with CIOs and CEOs of manufacturing companies the role of cloud computing comes up often.  There’s a very clear difference in the thinking of CIOs who see their jobs as selectively applying technologies to strategic needs versus those who are focused on compliance and risk aversion.  The former see their enterprises moving to public and hybrid clouds quickly to better integrate with dealers, distributors and suppliers at a strategic level.

The public cloud’s pervasiveness in the enterprise is growing rapidly.  This market dynamic is reflected in the report, Forecast: Public Cloud Services, Worldwide, 2010-2016, 2Q12 Update (ID:G00234814).  Gartner breaks out forecasts into the areas of Cloud Business Process Services/Business Process as a Service (BPaaS), Application Services/Software as a Service (SaaS), Application Infrastructure Services/Platform as a Service (PaaS), System Infrastructure Services/Infrastructure as a Service (IaaS) and Cloud Management and Security Services.  Highlights from the report are presented in the following five areas:

Cloud Business Process Services/Business Process as a Service (BPaaS)

  • Gartner is predicting that BPaaS will grow from $84.1B in 2012 to $144.7B in 2016, generating a global compound annual growth rate of 15%.
  • Of the eight subsegments Gartner is tracking in their BPaaS forecast, Cloud Payments (17.8%) Cloud Advertising (17.1%) and Industry Operations (15.1%) are expected to have the greatest compound annual growth rates (CAGR) in revenues generated by 2016.
  • In terms of revenue generated, Cloud Advertising is projected to grow from  $43.1B in 2011 to $95B in 2016, generating 17.1% CAGR in revenue growth through 2016.
  • Cloud Payments are forecast to grow from $4.7B in 2011  to $10.6B in 2016, generating a CAGR of 17.8% worldwide.
  • E-Commerce Enablement using BPaaS-based platforms is expected to grow from $4.7B in 2011 to $9B in 2016, generating a 13.6% CAGR in revenue globally.

Application Services/Software as a Service (SaaS)

  • SaaS-based applications are expected to grow from $11.8B in 2012 to $26.5B in 2016, generating a CAGR of 17.4% globally.  Gartner tracks ten different categories of SaaS applications in this latest forecast with CRM, ERP, and Web Conferencing, Teaming Platforms, and Social Software Suites being the three largest in terms of global revenue growth.
  • The three fastest-growing SaaS areas include Office Suites (40.7%), Digital Content Creation (32.2%) and Business Intelligence applications (27.1%) having the highest CAGRs from 2011 through 2016.
  • SaaS-based CRM will see the largest global revenue growth of all categories, increasing from $3.9B in 2011 to $7.9B in 2016, achieving a 15.1% CAGR worldwide.
  • Web Conferencing, Teaming Platforms, and Social Software Suites will grow from $2B in 2011 to $3.4B in 2016, generating an 11.2% CAGR.  Gartner is including Enterprise 2.0 applications in this category.
  • SaaS-based ERP is forecasted to grow from $1.9B in 2011 to $4.3B in 2016, achieving a 17.3% CAGR.
  • Supply Chain Management (SCM) is an area that Forrester, Gartner, IDC and others have predicted significant growth in.  Gartner’s latest forecast for SaaS-based SCM is $1.2B spent in 2011 growing to $3.3B in 2016, representing a 21.1% CAGR.

Application Infrastructure Services/Platform as a Service (PaaS)

  • Gartner forecasts the worldwide enterprise market for PaaS platforms will grow from $900M spent in 2011 to $2.9B in 2016, representing a 26.6% CAGR.
  • Growth rates by PaaS subsegment include the following: Application Development (22%), Database Management Systems (48.5%), Business Intelligence Platform (38.9%) and Application Infrastructure and Middleware (26.5%).
  • Application Infrastructure and Middleware is expected to be the largest revenue source in PaaS for the next four years.  Gartner reports this subsegment  generated $649M in 2011, projected to grow to $2.1B in 2016, generating $1.5B in revenue and a 26.5% CAGR.

System Infrastructure Services/Infrastructure as a Service (IaaS)

  • With a projected CAGR of 41.7%, this segment is the fastest growing of the five Gartner included in their public cloud forecast.  From $4.2B in revenue generated in 2011 to $24.4B in 2016, IaaS is expected to grow by just over $20B in the forecast period globally.
  • CAGR by IaaS segment from 2001 to 2016 include Compute (43.2%), Storage (36.6%) and Print (16%).
  • The Compute subsegment is expected to see the greatest revenue growth globally, growing from $3.3B in 2011 to $20.2B in 2016, generating a 43.2% CAGR.

Cloud Management and Security Services

  • Comprised of Security, IT Operations Management and Storage Management, Cloud Management and Security Services generated $2.3B in 2011 with a forecast of $7.9B in 2016, generating a 27.2% CAGR.
  • IT Operations Management (38.2%), Storage Management (30.6%) and Security (23.7%) each have relatively high CAGRs through 2016.

Bottom line:  Of the five areas Gartner includes in their forecast, BPaaS  and its subsegments show trending towards greater support for enterprise-wide transaction and e-commerce management. With 76% of the entire 2012 public cloud forecast being in the BPaaS segment, it is clear Gartner is seeing strong interest on the part of enterprise clients to spend in this area.

What’s Hot in CRM Applications, 2012

Serving the sales force is a mantra and mindset that resonates through the best companies I’ve ever worked with and for.

That priority alone can help galvanize companies who are adrift in multiple, conflicting agendas, strategies and projects.  Uniting around that goal – serving sales and getting them what they need to excel – can turn around even the most downtrodden companies.  And size doesn’t matter, the intensity of focus and commitment to excel  do.

That’s why the latest report from Gartner’s Ed Thompson, What’s “Hot” in CRM Application 2012, published last Thursday resonates with me.  He’s talking about how sales strategies need to be propelled by rapid advances in mobile technology, social CRM, sales content and collaboration, and clienteling to serve the sales force more thoroughly than ever before.  His assessment of what’s hot in CRM is a great foundation for getting behind the mantra of serving the sales force and engraining it into a corporate culture while getting full value from the latest technologies.

Here are the key take-aways from the report:

  • Software-as-a-Service (SaaS) delivery of CRM applications represented 34% of worldwide CRM application spending in 2011.  More than 50% of all Sales Force Automation (SFA) spending is on the SaaS platform.  Gartner clients who are successfully running SaaS are now looking at how to get value from Platform-as-a-Service (PaaS) in the context of selling strategies.
  • CRM spending grew 13% in 2011, fueled analytical, operational and social CRM growth.  Operational CRM represents 80% of all CRM spending and grew 10% in 2011.
  • Analytical CRM, in which Gartner includes predictive analytics and market segmentation analysis, grew a solid 10% in 2011 and is having a very strong year with inquiry traffic.
  • Social CRM grew 30% in 2011 in revenue terms and is 7% of total CRM spending globally as of 2011.   90% of Social CRM spending is originating in Business-to-Consumer (B2C) organizations with the remaining occurring in B2B.
  • Gartner is projecting that CRM will be one of the top three search terms on Gartner.com throughout calendar 2012 based on the trends and volume of calls they are seeing today.
  • CEOs see CRM as their #1 technology-enabled investment in 2012 according the query calls through April, 2012.
  • CRM is ascending rapidly in the priorities of CIOs in 2012, moving from 18th place to eight place  in the latest Gartner analysis.
  • The following table of Highest CRM Application Priorities, 2012 show what’s trending within Sales, Customer Service, E-Commerce and Marketing inquiries Gartner is receiving from its clients.  Consider these as leading indicators of interest.  Over time these areas will need to solidify for forecasts to be completed.
  • Apple iPads are the great maverick buy of 2012 with thousands being purchased by Sales and Marketing management with the immediate requirement of IT integration to these devices.   IT departments are scrambling on the security issues and lack of polices on BYOD.  In enterprise software, iPads are proving to be highly effective as demo platforms for new SaaS-based applications.  They have become the new sales bag of the 21rst century.
  •  High Tech, Life Sciences and Insurance are the three industries with the greatest levels of iPad adoption as of April 2012.  Gartner is predicting that by the end of 2012, 80% of all sales representatives in the pharmaceutical industry will be using iPads for their daily sales tasks.
  • Social or community customer service is the hottest area of growth for post-sales service with high-tech, media, travel, telecommunications, retail and education-based clients dominating client inquiries.

Predicting Cloud Computing Adoption Rates

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.

Sanity Check

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:

Source: http://futureofcloudcomputing.drupalgardens.com/2011-future-cloud-computing-survey-results

  • 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
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