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Posts from the ‘AWS Security’ Category

Jun 17

How AWS And Azure Competing Is Improving Public Cloud Adoption

Global Cloud

  • Public Cloud spending is predicted to grow at quickly, attaining 16% year-over-year growth in 2017.
  • Cowen’s AWS segment model is predicting Revenue and EBITDA to grow 25% and 26.8% annually from 2017 to 2022.
  • Microsoft Azure is viewed as the platform that customers would most likely purchase or renew going forward (28% of total vs. AWS at 22%, GCP at 15%, and IBM at 10%).

These and many other fascinating insights are from Cowen’s study published this week, Public Cloud V: AWS And Azure Still Leading The Pack (58 pp., PDF, client access reqd.). Cowen partnered with Altman Vilandrie & Company to complete the study. The study relies on a survey sample of 551 respondents distributed across small, medium and enterprises who are using Public Cloud platforms and services today.  For purposes of the survey, small businesses have less than 500 employees, medium-sized businesses as 500 to 4,999 employees, and enterprises as more than 5,000 employees. The study provides insight on a range of topics including cloud spending trends, workload migration dynamics, and vendor positioning. Please see pages 5,6 & 7 for additional details regarding the methodology.

The more AWS and Azure compete to win customers, the greater the innovation and growth in public cloud adoption as the following key takeaways illustrate:

  • Existing Public Cloud customers predict spending will grow 16% year-over-year in 2017. Existing mid-market Public Cloud customers predict spending will increase 18% this year. SMBs who have already adopted Public Cloud predict a 17% increase in spending in 2017, and enterprises, 13%. Public Cloud providers are the most successful upselling and cross-selling mid-market companies this year as many are relying on the cloud to scale their global operations to support growth.

Public Cloud Spending, 2017

  • AWS dominates awareness levels with SMBs who have existing Public Cloud deployments, with Microsoft Azure the most known and considered in enterprises. Consistent with many other surveys of Public Cloud adoption, IBM SoftLayer scored better in enterprises than any other segment including SMBs (71% vs. 58%). Google Cloud Platform has its strongest awareness levels in SMBs, attributable to the adoption of their many cloud-based applications in this market segment. They trail AWS, Azure, and SoftLayer in the enterprise, however. Across all existing companies who have adopted Public Cloud, the majority are most aware of AWS and Microsoft Azure. The second graphic provides an overview of awareness across the entire respondent base.

test

  • Microsoft is the most-used Public Cloud and the most likely to be purchased or renewed by 28% of all respondents. While AWS is the most reviewed Public Cloud across all respondents, Microsoft Azure is the most used. When asked which Public Cloud provider they are likely to purchase or renew, the majority of respondents said Microsoft Azure (28%), followed by AWS (22%), Google Cloud Platform (15%) and IBM SoftLayer (10%). The following graphic compares awareness, reviewed and use levels by Public Cloud platform.

Comparative Analysis Of Most Used Public Cloud Provider

  • Only 37% of current Azure users expect to add or replace their Public Cloud provider, compared to 53% of current AWS users and 50% of GCP users. The study found that approximately 40% of respondents expect to add or replace their cloud provider in the next two years, compared to 43% who predicted that last year. Companies who have adopted Microsoft Azure are least likely to replace/add other vendors, as only 37% of current Azure users expect to add or replace, compared to 53% of current AWS users and 50% of GCP users.

substitute

  • AWS and Azure dominate all seven facets of user experience included in the survey. AWS has the best User Interface, API Complexity, and Reporting & Billing. Microsoft Azure leads all Public Cloud providers globally in the areas of Management & Monitoring, Software & Data Integration, Technical Support and Training &   Google Cloud Platform is 3rd on all seven facts of user experience.

user

  • 18% of workloads are supported by Public Cloud today with SMBs and mid-market companies slightly leading enterprises (16%). Overall, 38% of all workloads are supported with on-premise infrastructure and platforms, increasing to 43% for enterprises. The following graphic illustrates the percentage of workloads supported by each infrastructure type.

Infrastructure

  • 77% of existing Public Cloud adopters are either likely or very likely to add a SaaS workload in the next two years, led by mid-market companies (81%). SMBs (76%) and enterprises (73%) are also likely/very likely to add SaaS workloads in the next two years. The majority of these new SaaS workloads will be in the areas of Testing & Development, Web Hosting, and e-mail and communications.

Comparing

  • Cowen’s AWS segment model is predicting Revenue and EBITDA to have a five-year Compound Annual Growth Rate (CAGR) of 25% and 26.8% from 2017 to 2022. AWS Net Income is predicted to increase from $2.7B in 2017 to $8.2B in 2022, attaining a projected 24.5% CAGR from 2017 to 2022. Revenue is predicted to soar from an estimated $16.8B in 2017 to $51.5B in 2022, driving a 25% CAGR in the forecast period.

Jul 30

5 Ways Brexit Is Accelerating AWS And Public Cloud Adoption

  • London sykline duskDeutsche Bank estimates AWS derives about 15% of its total revenue mix or has attained a $1.5B revenue run rate in Europe.
  • AWS is now approximately 6x the size of Microsoft Azure globally according to Deutsche Bank.

These and other insights are from the research note published earlier this month by Deutsche Bank Markets Research titled AWS/Cloud Adoption in Europe and the Brexit Impact written by Karl Keirstead, Alex Tout, Ross Sandler, Taylor McGinnis and Jobin Mathew.  The research note is based on discussions the research team had with 20 Amazon Web Services (AWS) customers and partners at the recent AWS user conference held in London earlier this month, combined with their accumulated research on public cloud adoption globally.

These are the five ways Brexit will accelerate AWS and public cloud adoption:

  • The proliferation of European-based data centers is bringing public cloud stability to regions experiencing political instability. AWS currently has active regions in Dublin and Frankfurt, with the former often being used by AWS’ European customers due to the broader base of services offered there. An AWS Region is a physical geographic location where there is a cluster of data centers. Each region is made up of isolated locations known as availability zones. AWS is adding a third European Union (EU) region in the UK with a go-live date of late 2016 or early 2017. Microsoft has 2 of its 26 global regions in Europe, with two more planned in the UK.  Google’s Cloud Platform (GCP) has just one region active in Europe. The following Data Center Map provides an overview of data centers AWS, Microsoft Azure and GCP have in Europe today and planned for the future.

Data Center Map

  • Brexit is making data sovereignty king. European-based enterprises have long been cautious about using cloud platforms to store their many forms of data. Brexit is accelerating the needs European enterprises have for greater control over their data, especially those based in the UK.  Amazon’s planned third EU region based in London scheduled to go live in late 2016 or early 2017 is well-timed to capitalize on this trend.
  • Up-front costs of utilizing AWS are much lower and increasingly trusted relative to more expensive on-premise  IT platforms. Brexit is having the immediate effect of slowing down sales cycles for managed hosting, enterprise-wide hardware and software maintenance agreements. The research team found that the uncertainty of just how significant the economic impact Brexit will have on the European economies is making companies tighten capital expense (CAPEX) budgets and trim expensive maintenance agreements.  UK enterprises are reverting to OPEX spending that is already budgeted.
  • CEOs are pushing CIOs to get out of high-cost hardware and on-premise software agreements to better predict operating costs faster thanks to Brexit. The continual pressure on CIOs to reduce the high hardware and software maintenance costs is accelerating thanks to Brexit. Because no one can quantify with precision just how Brexit will impact European economies, CEOs, and senior management teams want to minimize downside risk now. Because of this, the cloud is becoming a more viable option according to Deutsche Bank. One reseller said that public cloud computing platforms are a great answer to a recession, and their clients see Brexit as a catalyst to move more workloads to the cloud.
  • Brexit will impact AWS Enterprise Discount Program (EDP) revenues, forcing a greater focus on incentives for low-end and mid-tier services. Deutsche Bank Markets Research team reports that AWS has this special program in place for its very largest customers. Under an EDP, AWS will give price discounts to large customers that commit to a full year (or more) and pay upfront, in many cases with minimum volume increases. One AWS partner told Deutsche Bank that they’re aware of one EDP payment of $25 million. In the event of a recession in Europe, it’s possible that such payments could be at risk. These market dynamics will drive AWS to promote further low- and mid-tier services to attract new business to balance out these larger deals.

May 10

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Amazon Web Services Leading Cloud Infrastructure as a Service App Development

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

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

Assessing Cloud Infrastructure as a Service Providers with Inquiry Analytics  

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

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

cloud IaaS

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

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

Oct 31

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SaaS Adoption Accelerates, Goes Global in the Enterprise

In working with manufacturers and financial services firms over the last year, one point is becoming very clear: SaaS is gaining trust as a solid alternative for global deployments across the enterprise.  And this trend has been accelerating in the last six months.  One case in point is a 4,000 seat SaaS CRM deployment going live in Australia, Europe, and the U.S. by December of this year.

What’s noteworthy about this shift is that just eighteen months ago an Australian-based manufacturer was only considering SaaS for on-premises enhancement of their CRM system.  What changed?  The European and U.S. distribution and sales offices were on nearly 40 different CRM, quoting, proposal and pricing systems.  It was nearly impossible to track global opportunities.

Meanwhile business was booming in Australia and there were up-sell and cross-sell opportunities being missed in the U.S. and European-based headquarters of their prospects. The manufacturer  chose to move to a global SaaS CRM solution quickly.  Uniting all three divisions with a global sales strategy forced the consolidation of 40 different quoting, pricing and CRM systems in the U.S. alone.  What they lost in complexity they are looking to pick up in global customer sales.

Measuring Where SaaS Is Cannibalizing On-Premise Enterprise Applications

Gartner’s Market Trends: SaaS’s Varied Levels of Cannibalization to On-Premises Applications published: 29 October 2012 breaks out the percent of SaaS revenue for ten different enterprise application categories.  The greener the color the greater the adoption.  As was seen with the Australian manufacturer, CRM continues dominate this trend of SaaS cannibalizing on-premise enterprise applications.

Additional take-aways from this report include the following:

  • Perceived lower Total Cost of Ownership (TCO) continues to be the dominant reason enterprises are considering SaaS adoption, with 50% of respondents in 2012 mentioning this as the primary factor in their decision.
  • CRM is leading all other enterprise application areas in net new deployments according to the Gartner study, with the majority of on-premise replacements being in North America and Europe.
  • Gartner projects that by 2016 more than 50% of CRM software revenue will be delivered by SaaS.  As of 2011, 35% of CRM software was delivered on the SaaS platform.  Gartner expects to see SaaS-based CRM grow at three time the rate of on-premise applications.
  • 95% of Web analytics functions are delivered via the SaaS model  whereas only 40% of sales use cloud today according to the findings of this study.
  • The highest adoption rates of SaaS-based applications include sales, customer service, social CRM and marketing automation.
  • SaaS-based ERP will continued to be a small percentage of the total market, attaining 10% cannibalization by 2012.  Forrester has consistently said this is 13%, growing to 16% by 2015.
  • Office suites and digital content creation (DCC) will attain compound annual growth rates (CAGR) of 40.7% and a 32.2% respectively from 2011 through 2016. Gartner is making the assumption consumers and small businesses will continue be the major forces for Web-based office suites through 2013.
  • The four reasons why companies don’t choose SaaS include uncertainty if it is the right deployment option (36%), satisfaction with existing on-premise applications (30%), no further requirements (33%) and locked into their current solution with expensive contractual requirements (14%).

Bottom Line: Enterprises and their need to compete with greater accuracy and speed are driving the cannibalization of on-premise applications faster than many anticipated; enterprise software vendors need to step up and get in front of this if they are going to retain their greatest sources of revenue.

Source:  Market Trends: SaaS’s Varied Levels of Cannibalization to On-Premises Applications Published: 29 October 2012 written by Chad Eschinger, Joanne M. Correia, Yanna Dharmasthira, Tom Eid, Chris Pang, Dan Sommer, Hai Hong Swinehart and Laurie F. Wurster

Sep 3

Enterprise Software as a Service Market Forecast: The Future is Already Here – It’s Just Not Evenly Distributed

The prescient quote by William Gibson aptly describes the worldwide Software as a Service (SaaS) market today, especially in the enterprise.

Global adoption and growth of SaaS within enterprises is unevenly distributed yet growing rapidly.  One of the primary catalysts moving this forward are Amazon Web Services, Google, Microsoft, Salesforce and other platform providers lowering the barriers to creating new applications, continually investing in security technologies, and streamlining rapid prototyping, testing, and release of SaaS applications.

This week Salesforce showed how extensive the momentum is in their global base of developers during Dreamforce ’11.  The Developer Zone had the most innovation per square foot of any venue at this conference.  Insights gained from visiting the sessions at Dreamforce, speaking with Force evangelists and tech staff, and also with attendees form the basis of the following analysis and insights.  On Friday of last week Gartner also released the report, Forecast: Software as a Service, All Regions, 2010-2015 by Sharon A. Mertz, Chad Eschinger, Tom Eid, Yanna Dharmasthira, Chris Pang, Laurie F. Wurster, Tsuyoshi Ebina, Hai Hong Swinehart, which validated several of the trends seen in the Developer Zone at Dreamforce ’11.

Forecasting the Growth of SaaS in the Enterprise, 2015

In speaking with developers, vendors and after reviewing the Gartner report, here are several insights gained that illustrate how SaaS adoption will vary by region over the next four years:

  • APIs are getting more adept at managing multi-party transactions across all platforms.  Marc Benioff and Chuck Phillips alluded to this when Infor announced Inforce this week at Dreamforce.  It was also evident in how partners in the Developer Zone were demonstrating frameworks for supporting more advanced enterprise software application development.  These included supply chain management, the ability to manage complex project plans more effectively using apps based on these APIs, and greater control over collaboration development.  Gartner published their total software revenue forecast for SaaS delivery, 2007 – 2015 back in June, and a table from that analysis is shown below.  Their forecast reflects in large part depth of REST APIs which are part of Web Services.   This table is from the report, Forecast: Software as a Service, Worldwide, 2010-2015, 1H11 Update, 22 June 2011, ID:G00213816, Sharon A. Mertz, Chad Eschinger, Tom Eid, Chris Pang, Laurie F. Wurster.
  • Graphical interface flexibility, usability options, localization, and local language support dominate EMEA concerns about SaaS.  In Dreamforce sessions attended and in the Gartner report, it’s clear Salesforce is struggling to make localization work more effectively via their programming platforms and tools in EMEA.  This came out during many of the discussions in the Developer Zone as well.  All platform providers are facing this challenge, yet the pace of new API enhancements shows significant potential.  As a result the forecast for SaaS revenue in Western Europe is forecasted to be $2.66B in 2011 growing to $4.8B in 2015, achieving a compound annual growth rate (CAGR) of 17% according to Gartner.
  • Total Cost of Ownership (TCO) is aggressively pushed by Salesforce in the U.S. yet is most effective in EMEA.  This became evident in discussions and presentations, and also was validated by the recent Gartner report.  Salesforce also has extensive TCO calculators on its Force developer sites for the U.S. yet ironically they are finding they are most effective in EMEA sales cycles.
  • Based on my informal poll 20% of iPad-to-Salesforce account demos failed at Dreamforce.    Dozens of companies were hyping their iPad clients at Dreamforce, yet I found nearly one in five failed to deliver reliable performance. While the sample is hardly scientific, it does show that the iPad to Salesforce integration so heavily hyped by so many vendors is still nascent.  It’s as if these companies invested so much on iPad clients they ran out of time to make the back-end integrations work reliably.  Gartner found that lack of integration is the single greatest inhibitor to SaaS growth in North America.
  • Ease of speed and deployment, limited capital expense, and lower TCO are the most critical factors driving SaaS growth in U.S. enterprises today.  This became evident from listening to customer testimonials during the many vendor sessions in Moscone West, in addition to discussions with developers.  The impact of these factors is also evident in the total software revenue forecast for SaaS delivery within enterprise application software markets by region, 2008 – 2015.   This is from the Gartner report, Forecast: Software as a Service, All Regions, 2010-2015. Sharon A. Mertz, Chad Eschinger, Tom Eid, Yanna Dharmasthira, Chris Pang, Laurie F. Wurster, Tsuyoshi Ebina, Hai Hong Swinehart.

  • CRM continues to dominate SaaS usage across all enterprise applications, closely followed by Web conferencing and e-learning in North America and Northern Europe.  Both North America and Northern Europe have comparable adoption trends regarding these SaaS applications, with Western and Southern Europe lagging in terms of adoption and spending.
  • Asia/Pacific continues to be the most fragmented of all regions when it comes to SaaS adoption in the enterprise.  Countries with greater stability of their Internet infrastructures including Australia, Hong Kong, Singapore and South Korea are experiencing greater SaaS growth, and also contributing to Salesforce’s success in these regions.  Salesforce has 14.5% CRM share in this region, third behind SAP and Oracle. Emerging countries are the most rapid adopters of SaaS-based accounting, e-mail and collaboration-based apps.
  • China, India and Malaysia are experiencing the most rapid adoption of SaaS-based enterprise applications in the Asia/Pacific region.  WiPro’s decision to invest so heavily in Dreamforce as a promotional event is a case in point.  The Developer Zone had  several companies from this region offering their programming and system integration services as well.

Bottom line: SaaS adoption continues to accelerate globally across enterprise software, growing from $12B in 2011 to $21B in 2015, achieving a 16.3% CAGR annually. Platform providers are knocking down the barriers to market growth by using events including Dreamforce to educate, entertain and enable developers to quickly turn concepts into applications.

Jul 27

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Gartner Releases Their Hype Cycle for Cloud Computing, 2011

Calling the hype around cloud computing “deafening”, Gartner released their annual hype cycle for the 34 different technologies in a 75 page analysis today.  You can find the Hype Cycle at the end of this post and I’ve provided several of the take-aways below:

  • The industry is just beyond the Peak of Inflated Expectations, and headed for the Trough of Disillusionment. The further up the Technology Trigger and Peak of Inflated Expectations curve, the greater the chaotic nature of how technologies are being positioned with widespread confusion throughout markets. The team of analysts who wrote this at Gartner share that conclusion across the many segments of the Hype Cycle.
  • Gartner states that nearly every vendor who briefs them has a cloud computing strategy yet few have shown how their strategies are cloud-centric. Cloudwashing on the part of vendors across all 34 technology areas is accelerating the entire industry into the trough of disillusionment. The report cites the Amazon Web Services outage in April, 2011 as a turning point on the hype cycle for example.
  • Gartner predicts that the most transformational technologies included in the Hype Cycle will be the following: virtualization within two years; Big Data, Cloud Advertising, Cloud Computing, Platform-as-a-Service (PaaS), and Public Cloud computing between two and five years; and Community Cloud, DevOps, Hybrid Cloud Computing and Real-time Infrastructure in five to ten years.
  • There continues to be much confusion with clients relative to hybrid computing.  Gartner’s definition is as follows ”Hybrid cloud computing refers to the combination of external public cloud computing services and internal resources (either a private cloud or traditional infrastructure, operations and applications) in a coordinated fashion to assemble a particular solution”. They provide examples of joint security and management, workload/service placement and runtime optimization, and others to further illustrate the complex nature of hybrid computing.
  • Big Data is also an area of heavy client inquiry activity that Gartner interprets as massive hype in the market. They are predicting that Big Data will reach the apex of the Peak of Inflated Expectations by 2012.  Due to the massive amount of hype surrounding this technology, they predict it will be in the Trough of Disillusionment eventually, as enterprises struggle to get the results they expect.
  • By 2015, those companies who have adopted Big Data and extreme information management (their term for this area) will begin to outperform their unprepared competitors by 20% in every available financial metric. Early use cases of Big Data are delivering measurable results and strong ROI.  The Hype Cycle did not provide any ROI figures however, which would have been interesting to see.
  • PaaS is one of the most highly hyped terms Gartner encounters on client calls, one of the most misunderstood as well, leading to a chaotic market. Gartner does not expect comprehensive PaaS offerings to be part of the mainstream market until 2015.  The point is made that there is much confusion in the market over just what PaaS is and its role in the infrastructure stack.
  • SaaS performs best for relatively simple tasks in IT-constrained organizations. Gartner warns that the initial two years may be low cost for any SaaS-based application, yet could over time be even more expensive than on-premise software.
  • Gartner estimates there are at least 3M Sales Force Automation SaaS users globally today.

Bottom line: The greater the hype, the more the analyst inquiries, and the faster a given technology ascends to the Peak of Inflated Expectations. After reading this analysis it becomes clear that vendors who strive to be accurate, precise, real and relevant are winning deals right now and transcending the hype cycle to close sales.  They may not being getting a lot of attention, but they are selling more because enterprises clearly understand their value.

Source: Gartner, Hype Cycle for Cloud Computing, 2011 David Mitchell Smith Publication Date: 27 July 2011 ID Number: G00214915 © 2011

Jul 2

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Sizing the Public Cloud Services Market

Gartner’s latest forecast of the public cloud services market predicts that by 2015, this worldwide market will be worth $176.8 billion, achieving a five-year compound annual growth rate (CAGR) of 18.9%.

Their latest forecast is based on defining the public cloud services market from revenue generation, not an IT spending perspective.  This is in contrast to the public cloud services forecast IDC also released this week, stating that public IT cloud services spending would reach $72.9B by 2015.  Of the two approaches, the one that is revenue-based delivers a more granular, detailed look at Platform-as-a-Service (PaaS) and Infrastructure-as-a-Service (IaaS) challenges and opportunities for growth (see tables below for details).  The Gartner report, Public Cloud Services, Worldwide and Regions, Industry Sectors, 2010-2015, 2011 Update, was published on June 29, 2011.

Gartner’s decision to base their methodology on revenue generated versus pure IT spending opens up the potential to evaluate entirely new business models based on services growth.  The forecast is based on revenue either directly or indirectly generated from the sales of services and from sales to enterprise or consumers.  Business process services are defined in this forecast as any process that can be delivered as a service over a scalable, elastic and secure connection over the web.  This includes advertising, payroll, printing, e-c0mmerce, in addition to applying applications and systems infrastructure. Presented below are key take-aways and analysis from the reports.

Key Take-Aways

  • By 2015, the total market will be worth $176.8 billion, which represents a five-year compound annual growth rate (CAGR) from 2010 of 18.9%. The largest part of this is revenue derived from advertising that is used to provide IT services ($77.1 billion in 2015), which represents an addition to the total size of the IT market.
  • The transition of software from licensed to service models continues, but it has yet to reach breakthrough proportions (9.6% in 2010, rising to 13.8% in 2015). Traditional outsourcing services also continue to transition to cloud delivery models, involving a high degree of service standardization. Gartner continues to take a conservative view of revenue recognition in terms of SaaS adoption compared to other research firms as is shown in the following table.

  • Application and systems infrastructure are projected to grow the fastest in terms of revenue generation through 2015, with advertising-related revenue being a significant proportion of the total public cloud services market through the forecast period.  The following table breaks out public cloud revenue globally by business process services, applications, application infrastructure and systems infrastructure.
  • The high-tech, manufacturing and financial services sectors and the public sector will continue to be the most-aggressive adopters of cloud services through 2015.  Presented below is a table comparing cloud services revenue by industry sector.
  • The North American market continues to be, by far, the largest regional market representing 60% of the global market currently, but growth in China remains of interesting potential.
  • Financial services organizations in aggregate represent the largest users of public cloud services.
  • Some smaller countries will demonstrate very high growth (more than 25%) in e-commerce cloud services, because of high growth in underlying retail e-commerce. The Census Bureau of the U.S. Department of Commerce estimates that e-commerce sales in the fourth quarter of 2010 accounted for 4.3% of total U.S. retail sales.

Bottom line: Taking a revenue-based approach to defining cloud services shows how critical the application and system infrastructure is to overall market growth.  Gartner predicts the fastest growing revenue generating segment of public clouds will be storage services (89.5%) followed by Compute Services (47.8%) and supply management (39.5%).

Jun 18

Roundup of Cloud Computing and Software-as-a-Service (SaaS) Forecasts, June 2011

The gap is beginning to close between the value SaaS-based applications have the potential to deliver and what customers are achieving.

While SaaS-based software vendors are making major strides in integration, reliability, system performance and usability, it is the enterprise buyer’s skepticism and high standards forcing the market to move forward.  The latest series of market forecasts and surveys reflect greater use of actual customer results and a quickening pace of progress.

Performance-Driven Cultures and SaaS Adoption

Measuring business outcomes using industry standard and company-specific metrics typifies companies getting the best results.  A lack of clarity or confusion around strategy based goals leads to low adoption and eventual abandonment of SaaS initiates.  Sales and sales operations VPs are winning the debates against home-grown or internal system development based on speed of deployment, usability and integrated analytics of SaaS applications.  Based on the surveys and research completed this year, the best SaaS implementations are designed on a firm foundation of measurable results including quantifying risk.

Performance-driven cultures have a higher success rate with SaaS pilots, are more thorough in defining their own infrastructure (IaaS) and platforms (PaaS), and also know what success looks like from a metrics-driven standpoint.   The graphic, Performance-Driven Culture: The Metrics Continuum, shown to the left, was originally published in Gartner’s Predicts 2011: Enterprise Architecture Shifting Focus to Business Value Outcomes Report, November, 11, 2010 Philip Allega, et.al supports this point.  Please click on the graphic to expand it for easier reading.

Hype is Prolonging the Peak of Inflated Expectations

The bottom line is all really matters is measurable, repeatable performance when enterprises evaluate their SaaS strategies.  Many marketing, sales, sales operations and service VPs must defend their choice of SaaS over legacy system upgrades or internal system development.  Resistance to change and complacency in IT is slowly killing many companies who must step up and keep pace with their customers to survive. People are betting their jobs on this technology.  Many in marketing, sales and service want to know how to improve and measure business strategy performance.  That’s one of the main inflexion points in SaaS marketing today.

 The reality for enterprise users is that nothing gets purchased, no matter how wonderful the claims, unless there are strong metrics that link them back to business performance.  That’s what is deflating hype in this market faster than any other factor.  You can download the Gartner Hype Cycle for Cloud Computing 2010 from the link (no opt-in).  Please click on the graphic to download the Gartner Hype Cycle for Cloud Computing 2010.

Here are short summaries of the latest cloud computing and SaaS forecasts published recently:

  • Gartner is forecasting enterprise-based spending for Software-as-a-Service (SaaS) applications  will grow at a 16.3% compound annual growth rate through 2015. SaaS will grow at nearly double the pace of licensed enterprise applications during the forecast period.  Licensed applications will grow at a n 8.5% CAGR during the same period. The following  table, Total Software Revenue Forecast for SaaS Delivery Within the Enterprise Application Software Markets, 2007-2015 (Millions of U.S. Dollars) compares enterprise software spending by application category for the forecast period. Source: http://my.gartner.com/portal/server.pt?open=512&objID=260&mode=2&PageID=3460702&id=1728009&ref=

     Total Software Revenue Forecast for SaaS Delivery Within the Enterprise Application Software Markets, 2007-2015  (Millions of U.S. Dollars) 

     

  • The Asia-Pacific (APAC) Software as a Service (SaaS) market is expected to grow from $390M in 2008 to $4.3B in 2015, at an estimated CAGR of 41.0% from 2008 to 2015. The appeal and reach of software as a service (SaaS) continue to grow rapidly among enterprises in Asia Pacific. Australia & New Zealand (ANZ) is the largest regional SaaS market in Asia Pacific. SAAS is gaining momentum in ANZ because of the markets resemblance to the North American market with better broadband penetration, availability of applications getting delivered in SaaS mode and overall greater adoption of IT in general. Source: http://professional.wsj.com/article/TPMTPW000020110214e72e002k2.html
  • Cloud middleware systems markets at $1.5B in 2010 are forecast to reach $4.3B, worldwide by 2017.  Cloud computing middleware represents the base for development of all cloud computing infrastructure as it supports systems integration and systems self-provisioning.  Market leaders are predicted to be Akamai, IBM, Google, Microsoft, and Oracle. Source: http://wintergreenresearch.com/
  • Infonetics Research forecasts the overall managed security services market, including CPE, SaaS, and cloud services, to reach just under $17B by 2015.  SaaS and cloud-based security services are expected to make up close to half of the overall managed security services market opportunity by 2015 Worldwide SaaS revenue is forecast to grow dramatically over the next few years, with a compound annual growth rate (CAGR) of 23% from 2010 to 2015.  Source: WSJ Journal 
  • Cloud service adoption is up 61% from 2010 and 45% of multinational corporations (MNCs) already use cloud sourcing for at least some elements of key IT services.  Cable & Wireless and Ovum partnered to create this white paper, full of excellent insights and research data: http://www.cw.com/assets/content/pdfs/resource/ovum-cloud-wp.pdf
  • 60 percent of companies worldwide said cloud computing is a top IT priority for the next year, the sentiment is even higher in the C-suite with three in four (75 percent) C-level executives reporting cloud computing as top of mind.  According to an Avanade Research and Insights’ Global Survey: Has Cloud Computing Matured? Third Annual Report, June 2011, there is also significant purchasing of cloud services without the IT department’s knowledge, with nearly 20% of all purchases never reviewed with the CIO. Source: Avanade Research Report  
  • By 2014, cloud computing services will grow to a $45B industry a year (IDC) and SaaS to grow at 21% CAGR to touch $17.6B.  Microsoft recently published the following presentation, Grow Your Business with Cloud – Are You Ready?  You can download a copy of the presentation by clicking on the presentation to the right.
  • The global cloud computing market is expected to grow from $37.8B in 2010 to $121.1 B in 2015 at a  CAGR of 26.2% from 2010 to 2015 according to Yankee Group. SaaS is the largest segment of the cloud computing services market, accounting  as it did for 73% of the market’s revenues in 2010. The IaaS and PaaS markets are still at a nascent stage and  currently hold a small share of the Cloud computing services market. However, these are expected to witness  moderate growth due to their flexibility and cost effectiveness.Source: CSS Corp. Analysis.
  • Project and Portfolio Management (PPM) software emerged in 2009 as a fast-growing market for SaaS, with a compound annual growth rate (CAGR) of more than 40% projected for the next five years according to Gartner. PPM software consumption environments are changing radically, with hosted and SaaS options — as a result, most traditional on-premises vendors are forced to provide SaaS alternatives to counter new entrants and SaaS-only PPM vendors.  Source:  Competitive Landscape: SaaS Project and Portfolio Management Software, Worldwide, 2011 published 6 April 2011.

Mar 10

Building Powerful Web Applications in the AWS Cloud

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Jinesh Varia, Technology Evangelist at Amazon.com created the following presentation to illustrate how Amazon EC2 instances are being used for creating high performance Web applications.   He relies heavily on the integration technologies that unify the AWS Cloud Stack, which is shown to the right.  To see a larger image of the stack, please click on it.

What is interesting about this slide deck is the detail it provides in explaining the more complex programming concepts of AWS.  He provides useful insights into how  Cloud Elasticity as an application platform component works through the use of detailed system-level diagrams.  For example slides 21 and 22 are examples that show how Cloud Elasticity can be achieved with AWS Scaling Zones.

There are system-level definitions of AWS workflows including security that rely on EC2 instances as well.  At 70 slides, this is an excellent overview of Web application development on AWS.

Nov 23

Web 2.0 Summit 2010 Point of Control: The Cloud

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O’Reilly Media and UBM TechNet sponsored the Web 2.0 Summit 2010 held in San Francisco from November 15th to 19th.  This event has become one of the premier conferences globally due to the quality of the content and speakers it attracts, and the thought leadership of the concepts presented there.

The following panel discussion includes Marc Benioff, Founder and CEO of Salesforce.com; Andy Jassy, SVP of Amazon Web Services and Amazon Infrastructure; Paul Maritz, President and CEO of VMware and Tim O’Reilly, founder and CEO of O’Reilly Media, Inc.

The discussion is on the aspects of application independence in Cloud environments, the future direction of cloud integration technologies, and the emergence of Cloud-based operating system.

You can find the site by clicking on the Web 2.0 Summit Points of Control map below.

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