How Quickly Will Software Vendors Move to the Cloud


There’s an excellent discussion going on over on the Cloud Computing Google Group about the pace of migration of traditional software to a SaaS model.

Here I recently went into some of the very real reasons why the migration is slower than some would like, but didn’t really talk about the pace of adoption.  There are some numbers that make for some interesting analysis.

According to PwC, in 2009, the top 100 software vendors (traditional non-SaaS) generated 3.7% of their revenues from SaaS in the US; and 1.1% of their revenues from SaaS in Europe.  In the same report, the US has a 44% market share and Europe has 36% market share by revenue (License, Maintenance and Support).

According to Gartner, in 2010, the WW installed enterprise software market grossed about $104 Billion.  So, roughly, we could say that installed software vendors (US & EU only ) brought in nearly $5 Billion in revenues in 2010.  So nearly 5% of revenues since the inception of SaaS (not including ASP)?

While some ISV CEOs may position the cloud as a fad/irrelevant/non-strategic/etc. the smart companies are out there experimenting with technologies, use-models, and business models…..but most importantly, they’re talking to their customers (who will buy) and vendors (who are looking round corners for their customers).  The benefits of the cloud are undeniable, but there are impacts on both customers and vendors that need to be carefully navigated.

Even after a dozen or so years since the launch of Salesforce.com, we’re still in the early adoption phase of this new phase of computing delivery and application consumption.

Will installed software ever go away?  Have you installed an iPhone/iPad/Android app recently?

Posted under cloud

This post was written by James Colgan on February 2, 2012

Tags: ,


 

8 Cloud Considerations Beyond the Servers

For many (most?) software vendors, a move to the cloud has transitioned from an abstract concept to an implementation discussion.  ”How do we provide our software to our customers via the cloud?”
Fortunately, fueled by tremendous opportunity and open source technologies like Xen and the OpenStack initiative, there is tremendous choice of cloud infrastructure (IaaS) vendor.
Looking beyond the servers though, here are a few points to consider when evaluating your provider and the team that will be using and supporting your newly minted cloud solution.

1. Provisioning Automation

There is a great deal of potential automation available from your IaaS vendor, but there’s tremendous breadth within the market…and a lot more that could be offered moving forward.  Key to the efficient management of any cloud is a sophisticated API leveraged by easy to use tools and interfaces.  (CloudWatch from AWS is a good example of a manually available monitoring system.)  The greater the amount of abstraction that can be offered, the cheaper your cloud will be to operate from a human perspective.
2. License Management
Beyond the hardware, how are your software licenses going to be managed?  This challenge incorporates security, automation, monitoring, and utilization.
3. Access Control & Security
A fundamental value proposition of cloud computing is scalability.  To make available a theoretically infinite pool of compute resources to your organization or customers would have little meaning if IT needed to be called every time access was to be provided or expanded upon.  Access must be controlled and secure, but it should not be a bottleneck.
4. Billing and Invoicing
Accounting for compute resource utilization by organizations within a company is important (as we come up against Tax Day here in the US).  However, charging out to your customers in an automated way that fits industry business practices and expectations is crucial to ensure cloud success.  How will you bill your customers?  How will your customers pay?  How will the use of compute resources be incorporated and combined with the use of software or services?
5. Server-side installs
In preparation for automated provisioning, setup and installation of software to be used within the cloud can take considerable time and resources.  Automated replication of instances is crucial, but what about software that runs different jobs in parallel across multiple networked servers?  How is the setup of clusters with their associated software stacks to be done while maintaining software licensing practices?
6. User Support
Now that your organization or customers are on the cloud, there is great opportunity to provide technical support remotely and in-line with your software.  Which medium works best for your customers and your software?  What solution providers are there in this arena?  How do we integrate these new support mechanisms into existing processes?
7. User Management Tools & Analytics
More than ever before, cloud delivery of your software provides more statistics and data immediately useful to sales, marketing, and product management organizations.  How is this data going to be captured, displayed, and ultimately used effectively?
8. Scale & IT Investment
All of the above comes into stark relief when a trial or proof-of-concept project proves attractive to customers and profitable to you as an organization.  How do you scale your cloud offering across market segments and geographies?  How do you scale the number of users and the varied use-models that the cloud enables?  How do move on-boarding and delivery into the sales and marketing organization? How do you do all of this without investing in IT to the point that your cost-of-sales actually increases?
These are the types of questions we discuss with our customers all the time, and endeavor to provide solutions for.  What challenges, “beyond the servers”, do you come across and consider as you make the transition to the cloud?

Posted under Xuropa, cloud

This post was written by James Colgan on April 5, 2011

Tags: , ,


 

Cloud Market Numbers (and the size of AWS)

The Economist this week published an article (Tanks in the Cloud) that talked about an attempt to fill in the cloud market knowledge gap left by industry analysts such as Forrester Research.  The problem the analysts have is that the further down you go in the Cloud stack, the less forthcoming companies are in divulging their revenue numbers.  Companies say even less about the number of servers they have in their data centers (which is where the tanks come in).

The 2010 revenue numbers of interest (see illustration) are SaaS (Software-as-a-Service) $11.7 Billion (Forrester Research); PaaS (Platform-as-a-Service) $311 Million (Forrester Research); IaaS (Infrastructure-as-a-Service) ~$1 Billion.

Cloud Layers with 2010 Revenues

The “$1 Billion” figure for IaaS comes from an extrapolation from estimates of revenues generated for Amazon by its AWS (Amazon Web Services) business.  Two estimates were used, one performed by Randy Bias of Cloudscaling ($500M to $700M), and the other by UBS ($500M in 2010, and $750M in 2011 - a tidy growth rate).

And the tanks? I’ll leave it to the article, but the method applied by Cloudkick (acquired by Rackspace) and Guy Rosen estimated Amazon to be deploying around 90,000 virtual servers per day in their East Coast region alone.  The estimate is a little on shaky ground, but “in the land of the blind, the one eyed man is king” right?

Anyway, that’s a lot of servers.  It makes you think about software vendors considering turning their data centers into clouds to make their software available in a SaaS model.  The private-cloud-made-public is a good way to start at this nascent stage of market development, but how does this scale as we project out?

Posted under cloud

This post was written by James Colgan on January 11, 2011

Tags: , , , ,