- 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.
- 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.
- Asia/Pacific grew the fastest of all regions globally, increasing 9% 2015, closely followed by greater China with 18.4% growth.
These and many other insights into the current state of the global CRM market are from Gartner’s Market Share Analysis: Customer Relationship Management Software, Worldwide, 2015 (PDF, client access) published earlier this month. The top five CRM vendors accounted for 45% of the total market in 2015. Salesforce dominated in 2015, with a 21.1% annual growth rate and absolute growth of over $902M in CRM revenue, more than the next ten providers combined. Gartner found that Salesforce leads in revenue in the sales and customer service and support (CSS) segments of CRM, and is now third in revenue in the marketing segment. Gartner doesn’t address how analytics are fundamentally redefining CRM today, which is an area nearly every C-level and revenue team leader I’ve spoken with this year is prioritizing for investment. The following graphic and table compare 2015 worldwide CRM market shares.
Adobe, Microsoft, and Salesforce Are Growing Faster Than The Market
Adobe grew the fastest between 2014 and 2015, increasing worldwide sales 26.9%. Salesforce continues to grow well above the worldwide CRM market average, increasing sales 21.1%. Microsoft increased sales 20% in the last year. The worldwide CRM market grew 12.3% between 2014 and 2015.
Analytics, Machine Learning, and Artifical Intelligence Are The Future Of CRM
Advanced analytics, machine learning and artificial intelligence (AI) will revolutionize CRM in the next three years. Look to the five market leaders in 2015 to invest heavily in these areas with the goal of building patent portfolios and increasing the amount of intellectual property they own. Cloud-based analytics platforms offer the scale, speed of deployment, agility, and ability to rapidly prototype analytics workflows that support the next generation of CRM workflows. My recent post on SelectHub, Selecting The Best Cloud Analytics Platform: Trends To Watch In 2016, provides insights into how companies with investments in CRM systems are making decisions on cloud platforms today. Based on insights gained from discussions with senior management teams, I’ve put together an Intelligent Cloud Maturity Model that underscores why scalability of a cloud-based analytics platform is a must-have for any company.
Sources: Gartner Says Customer Relationship Management Software Market Grew 12.3 Percent
Bottom line: Enterprises are impatient to translate their investments in cloud apps and the insight they provide into business outcomes and solid results today.
The following insights are based on a series of discussions with C-level executives and revenue team leaders across several industries regarding their need for an Intelligent Cloud:
- In the enterprise, the cloud versus on-premise war is over, and the cloud has won. Nearly all are embracing a hybrid cloud strategy to break down the barriers that held them back from accomplishing more.
- None of the C-level executives I’ve spoken with recently are satisfied with just measuring cloud adoption. All are saying the want to measure business outcomes and gain greater insights into how they can better manage revenue and sales cycles.
- Gaining access to every available legacy and 3rd party system using hybrid cloud strategies is the new normal. Having data that provides enterprise-wide visibility gives enterprises greater control over every aspect of their selling and revenue management processes. And when that’s accomplished, the insights gained from the Intelligent Cloud can quickly be turned into results.
Welcome to the Era of the Intelligent Cloud
The more enterprises seek out insights to drive greater business outcomes, the more it becomes evident the era of the Intelligent Cloud has arrived. C-level execs are looking to scale beyond descriptive analytics that defines past performance patterns. What many are after is an entirely new level of insights that are prescriptive and cognitive. Getting greater insight that leads to more favorable business outcomes is what the Intelligent Cloud is all about. The following Intelligent Cloud Maturity Model summarizes the maturity levels of enterprises attempting to gain greater insights and drive more profitable business outcomes.
Why The Intelligent Cloud Now?
Line-of-business leaders across all industries want more from their cloud apps than they are getting today. They want the ability to gain greater insights with prescriptive and cognitive analytics. They’re also asking for new apps that give them the flexibility of changing selling behaviors quickly. In short, everyone wants to get to the orchestration layer of the maturity model, and many are stuck staring into a figurative rearview mirror, using just descriptive data to plan future strategies. The future of enterprise cloud computing is all about being able to deliver prescriptive and cognitive intelligence.
Consider the following takeaways:
Who Is Delivering The Intelligent Cloud Today?
Just how far advanced the era of the Intelligent Cloud is became apparent during the Microsoft Build Developer Conference last week in San Francisco. A fascinating area discussed was Microsoft Cognitive Services and their implications on the Cortana Intelligence Suite. Microsoft is offering a test drive of Cognitive Services here. Combining Cognitive Services and the Cortana Intelligence Suite, Microsoft has created a framework for delivering the Intelligent Cloud. The graphic below shows the Cortana Analytics Suite.
Employees would most recommend Zerto, FusionOps, Google, OutSystems, AppDirect, Sumo Logic, Cloudera, HyTrust, Tableau Software and Domo to their friends looking for a cloud computing company to work for in 2016. These and other insights are from an analysis completed today to determine the best cloud computing firms and CEOs to work for this year.
To keep the rankings and analysis completely impartial and fair, the latest Computer Reseller News list, The 100 Coolest Cloud Computing Vendors Of 2016 is the basis of the rankings. Cloud computing companies are among the most competitive there are about salaries, performance and sign-on bonuses and a myriad of perks and benefits. They are also attracting senior management teams that have strong leadership skills, many of whom are striving to create distinctive company cultures. The most popular request from Forbes readers are for recommendations of the best cloud computing companies to work for, and that’s what led to this analysis.
Using the 2016 CRN list as a baseline to compare the Glassdoor.com scores of the (%) of employees who would recommend this company to a friend and (%) of employees who approve of the CEO, the table below is provided. You can find the original data set here. There are many companies listed on the CRN list that doesn’t have than many or any entries on Glassdoor, and they are excluded from the rankings shown below but are in the original data set. If the image below is not visible in your browser, you can view the rankings here.
The highest rated CEOs on Glassdoor as of February 3rd, 2016 include the following:
- Ziv Kedem, Zerto, 100%
- Gary Meyers, FusionOps, 100%
- Christian Chabot, Tableau Software, 100%
- John Burton, Nintex, 100%
- Rob Mee, Pivotal, 100%
- Rajiv Gupta, Skyhigh Networks, 100%
- Ken Shaw Jr., Infrascale, 100%
- Beau Vrolyk, Engine Yard, 100%
- Ramin Sayar, Sumo Logic, 99%
- Sundar Pichai, Google, 98%
- Lew Cirne, New Relic, 97%
- Daniel Saks, AppDirect, 96%
- James M. Whitehurst, Red Hat, 96%
- Marc Benioff, Salesforce, 96%
- Tom Kemp, Centrify, 95%
- Jeremy Roche, FinancialForce, 95%
- Global tech leaders predict cloud computing (11%), mobile platforms and apps (9%), Internet of Things (IoT)/machine-to-machine (M2M) (9%) and data and analytics (9%) will be the most disruptive technologies over the next three years.
These and many other insights are from the fourth annual 2015 Global Technology Innovation Survey released via webcast by KPMG last month. KPMG surveyed 832 technology industry business leaders globally, with the majority of being C-level executives (87%). Respondents were selected from a broad spectrum of businesses including tech industry startups, mid- and large-scale enterprises, angel investors and venture capital firms. For an in-depth explanation of the survey methodology, please see slides 6 and 7 of the webinar presentation. The goals of the survey include spotting disruptive technologies, identifying tech innovation barriers and opportunities, and tracking emerging tech innovation hubs.
The five insights and predictions from the report include the following:
- Global tech leaders predict cloud computing (11%), mobile platforms and apps (9%), Internet of Things (IoT)/M2M (9%) and data and analytics (9%) will be the most disruptive technologies over the next three years. U.S. tech leaders predict biotech/digital health/healthcare IT (15%), data and analytics (14%) and cloud computing (14%) will be the three most disruptive technologies over the next three years. Chinese tech leaders predict artificial intelligence/cognitive computing (15%) will be the most disruptive technology impacting the global business-to-consumer (B2C) marketplace.
- The three most disruptive technologies predicted to drive business transformation in enterprises over the next three years in the U.S. include cloud computing (13%), data and analytics (13%), and cyber security (10%). Japanese tech leaders predict artificial intelligence/cognitive computing will have the greatest effect (23%), and 14% of Chinese tech leaders predict the Internet of Things/M2M (14%) will have the greatest impact on business transformation in their country. The following table compares global tech leader’s predictions of which technologies will disrupt enterprises the most and drive business transformation over the next three years.
- Improving business efficiencies/higher productivity, and faster innovation cycles (both 20%) are top benefits tech leaders globally are pursuing with IoT strategies. The point was made on the webinar that in Asia, consumers are driving greater adoption of IoT-based devices to a richer contextual customer experience. Greatest challenges globally to adopting IoT is technology complexity (22%), lack of experience in the new technology or business model (16%), and both displacement of the existing tech roadmap and security (both 13%).
- Analytics are most often adopted to gain faster innovation cycles (25%), improved business efficiencies and higher productivity (17%) and more effective R&D (13%). The greatest challenges are technology complexity (20%) and lack of experience in the new technology or business model (19%),
- Tech leaders predict the greatest potential revenue growth for IoT in the next three years is in consumer and retail markets (22%). IoT/M2M is also expected to see significant revenue growth in technology industries (13%), aerospace and defense (10%), and education (9%). The following graphic compares tech leader’s predictions of the industries with the greatest potential revenue growth (or monetization potential) in the next three years.
Tech Innovation Global Webcast presenting the findings of KPMG’s 2015 Global Technology Innovation Survey
KPMG Survey: Top Disruptive Consumer Tech – AI In China, Healthtech In U.S., 3-D Printing In EMEA
- Channel sales and inside sales strategies delivered the highest revenue growth rates in 2014.
- Companies in the $5M – $7.5M range achieved 70% revenue growth in 2014, surpassing the median 36% growth rate last year.
These and many other insights are from the 2015 Pacific Crest SaaS Survey published by David Skok of Matrix Partners in collaboration with Pacific Crest Securities. You can download a free copy of Part I of the study here (PDF, opt-in, 72 pp). 305 SaaS companies were interviewed, 31% from international locations and 69% from North America. David Skok and Pacific Crest Securities will publish Part 2 of the results in the near future. SaaS Metrics 2.0 – Detailed Definitions provides a useful reference for many of the SaaS metrics mentioned in the study.
This year’s survey attracted an eclectic base of respondents, with median revenues of $4M a year, with 133 companies reporting less than $5M, and 57 over $25M. Annual Contract Value (ACV) across all respondents is $21K, with 17% of respondents reporting ACVs over $100K. Please see pages 3 & 4 of the study for a description of the methodology. Key take-aways from the study include the following:
- SaaS GAAP revenue growth is accelerating in 2014 and is projected to increase further in 2015 from 44% to 46%. Median revenue growth in 2014 for all survey respondents was 44%, with the aggregate projected growth for 2015 reaching 46%. When SaaS companies with less than $2.5M in revenues are excluded, median GAAP growth was 35% in 2014 and is expected to reach that same level in 2015.
- SaaS companies with mixed customer strategies are growing at 57% a year. Excluding respondent companies with less than $2.5M in revenues, a mixed customer strategy dominates all others. Concentrating on enterprises and small & medium businesses (SMBs) both drove 33% revenue growth of respondent companies this year.
- 40% of SaaS companies are using Amazon Web Services (AWS) to deliver their apps today. AWS is projected to increase to 44% three years from now, with Microsoft Azure increasing from 3% today to 6% in 3 years.
- 41% of all SaaS companies surveyed rely primarily on field sales. Factoring out the companies with less than $2.5M in revenue, field sales accounts for 32%.
- Field sales dominates as the most effective sales strategy when median deal sizes are $50K or more. In contrast, inside sales dominates $5K to $15K deal sizes, and the Internet dominates deal sizes less than $1K. The following graphic provides insights into the primary mode of sales by median initial contract size.
- 16% of new Average Contract Value (ACV) sales is from upsells, with the largest companies being the most effective at this selling strategy. One of the strongest catalysts of a SaaS companies’ growth is the ability to upsell customers to a higher ACV, generating significantly greater gross margin in the process. SaaS companies with revenues between $40M to $75M increase their ACV by 32% using upsells. Larger SaaS companies with over $75M in sales generate 28% additional ACV with upsell strategies.
- The highest growth SaaS companies are relying on upsells to fuel higher ACV. There is a significant difference between the highest and lowest growth SaaS companies when it comes to upsell expertise and execution. The following graphic provides an overview by 2014 GAAP revenue category of percent of ACV attributable to upsells.
- 60% are driving revenues with “Try Before You Buy” strategies, with 30% generating the majority of their revenues using this approach. On contrast, only 30% of companies generate revenues and ACV from freemium.
- 73% of midmarket companies say the complexity of their stored data requires big data analytics apps and tools to better gain insights from.
- 54% of midmarket companies’ security budgets are invested in security plans versus reacting to threats.
These and many other insights are from Dell’s second annual Global Technology Adoption Index (GTAI 2015) released last week in collaboration with TNS Research. The Global Technology Adoption Index surveyed IT and business decision makers of mid-market organizations across 11 countries, interviewing 2,900 IT and business decision makers representing businesses with 100 to 4,999 employees.
The purpose of the index is to understand how business users perceive, plan for and utilize four key technologies: cloud, mobility, security and big data. Dell released the first wave of its results this week and will be publishing several additional chapters throughout 2016. You can download Chapter 1 of the study here (PDF, no opt-in, 18 pp.).
Key take-aways from the study include the following:
- Orchestrating big data, cloud and mobility strategies leads to 53% greater growth than peers not adopting these technologies. Midmarket organizations adopting big data alone have the potential to grow 50% more than comparable organizations. Effective use of Bring Your Own Device (BYOD) mobility strategies has the potential to increase growth by 53% over laggards or late adopters..
- 73% of North American organizations believe the volume and complexity of their data requires big data analytics apps and tools. This is up from 54% in 2014, indicating midmarket organizations are concentrating on how to get more value from the massive data stores many have accumulated. This same group of organizations believe they are getting more value out of big data this year (69%) compared to last year (64%). Top outcomes of using big data include better targeting of marketing efforts (41%), optimization of ad spending (37%), and optimization of social media marketing (37%).
- 54% of an organization’s security budget is invested in security plans versus reacting to threats. Dell & TNS Research discovered that midmarket organizations both in North America and Western Europe are relying on security to enable new devices or drive competitive advantage. In North America, taking a more strategic approach to security has increased from 25% in 2014 to 35% today. In Western Europe, the percentage of companies taking a more strategic view of security has increased from 26% in 2014 to 30% this year.
- IT infrastructure costs to support big data initiatives (29%) and costs related to securing the data (28%) are the two greatest barriers to big data adoption. For cloud adoption, costs and security are the two biggest barriers in midmarket organizations as is shown in the graphic below.
- Cloud use by midmarket companies in France increased 12% in the last twelve months, leading all nations in the survey. Of the 11 countries surveyed, France had the greatest increase in cloud adoption within midmarket companies. French businesses increased their adoption of cloud applications and platforms from 70% in 2014 to 82% in 2015.
Sources: Dell Study Reveals Companies Investing in Cloud, Mobility, Security and Big Data Are Growing More Than 50 Percent Faster Than Laggards. October 13, 2015