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Cloud computing disrupts the vendor landscape

Christine Burns | Dec. 5, 2011
If you think cloud computing is a disruptive force within the enterprise, just imagine what the cloud is doing to the vendor landscape.

"There are no guarantees in a market this size, but we see [Microsoft and VMware] as the companies in the best position now," Smith says.

The SaaS landscape

SaaS is the most mature cloud layer and, in fact, existed well before the term cloud computing gained prevalence, says Robert Mahowald, Research Vice President of SaaS and Cloud Services at IDC.

Mahowald makes these two observations about the state of SaaS today: Most enterprises are looking to SaaS for "net new" applications, not as a replacement for existing apps. And many software vendors are developing their products to be consumed via the cloud first, and for on premise consumption secondarily, if at all.

IDC says the 2010 SaaS market rang in at $16.6 billion, a figure that represents three-quarters of all IT-based public cloud revenue. IDC predicts that by 2015, worldwide SaaS revenues will skyrocket to $53.6 billion annually.

"The SaaS market has solidified because it just makes financial sense for both the provider and the consumer. That combination always drives adoptions," says Robert K. West, founder and CEO of Echelon One, an IT security and risk management consultancy.

Vendors with an edge today tend to be those that developed their products to run natively in the cloud. They were built to take advantage of the cloud's elastic nature, to be sold on a usage-based model, have multi-tenancy as a basic tenet so that security is constructed accordingly, and have worldwide reach and a resilient infrastructure underneath the covers.

Companies held in high regard for their SaaS offerings include (CRM), WorkDay (HR and financial management), Google (desktop productivity), Oracle (business analytics), Concur Technologies (travel and expense management) and NetSuite (ERP).

That's not to say that the traditional enterprise software giants such as SAP and Oracle are out of the race. But they are playing a bit of catch-up. Some of the tension between those two camps came to the fore in the recent dustup between Salesforce's Marc Benioff and Oracle's Larry Ellison. 

"The SAPs and Oracles of the world are trying to adapt their existing software to the cloud, which is extremely difficult and time consuming," says Joe Coyle, CTO of Capgemini North America, a consulting and outsourcing firm that helps enterprises deploy cloud services. He argues that the process of putting these applications in the cloud is not difficult, but getting them to take advantage of the elastic nature of the cloud, is.

"Getting an SAP application to know there is more compute power available when it needs it, is the challenge," Coyle says. Until those applications are reworked to understand what is dynamically available to them, they will lag behind the SaaS leaders, Coyle says.


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