The “As-a-Service” Cloud War | Article

Cloud WarSmart phones, tablets and other consumer devices are radically changing the technology world. They untether users who were once tied to their personal computers. Now these users demand access to their apps and data from anywhere over a variety of devices. This is possible using cloud computing.

That’s why the cloud opportunity keeps growing each day. The Cisco Global Cloud Index (GCI) 2012 forecasted that companies will process nearly two-thirds of all their workloads in the cloud by 2016.  Overall cloud IP traffic is forecasted to grow at a CAGR of 44 percent (2011 – 2016), while businesses are growing at just 37 percent.1  The total public cloud services market size will increase from US$91.4 billion in 2011 to US$206.6 billion in 2016, according to a September report from Gartner.

What are the healthiest growth options for cloud computing?
The debate that is surfacing for cloud providers is obvious: where will the healthiest growth opportunities for cloud emerge? Will business process as a service (BPaaS) have an edge over software as a service (SaaS) when it comes to demand generation for cloud? The answer to that question will cast the strategic priorities, decide investments, dictate skill development and reorder marketing focus. In short, it will substantially reshape the cloud business.

Many believe that BPaaS will be the single biggest driver of growth. Certainly, there is growing evidence to support that belief. Gartner reports that BPaaS accounts for about 77 percent of the total cloud market with estimates that it will be US$84.2 billion by the end of 2012.

SaaS is the next-largest segment; Gartner forecasts it will grow to US$14.4 billion by the end of this year.

Looking at the figures, there is a no contest.  BPaaS is easily the winner in the “as a service” war. The question is: Will this trend hold and for how long? Or, what will tilt the equation so that SaaS becomes central to cloud providers?

These questions do not – as yet – have clear answers. But examining them paints an interesting picture.

BPaaS is ahead of SaaS…now
Cloud technology provides configurable computing services across shared infrastructure.  It is an on-demand and self-service service that uses client devices, allowing users to pool resources in an elastic fashion. Cloud technology is also something they can measure.
The definition is significant from a SaaS provider perspective. SaaS is completely about scalability (technical as well as business scalability where the incremental costs of provisioning and support drop as the demand goes up). But even more importantly, cloud spells out a clear route to higher operational efficiencies, leading to lowered costs for SaaS providers that leverage cloud for infrastructure as a service (IaaS) and platform as a service (PaaS).

SaaS providers are discovering to their disappointment that cloud services are often nothing more than proprietary implementations of virtualization. These don’t necessarily lend themselves to offering elasticity or a measurable service.

Why is this shortcoming endemic to cloud providers? One of the reasons could be that in terms of technology time, it is still early days for cloud. Most cloud providers, if you discount the Big Two (Amazon AWS and Microsoft Azure), have been kept busy by large organizations that are still not through with migrating their data centers to the cloud. As a consequence, the IaaS and PaaS-type customer continues to be the bread and butter for the business.

BPaaS is ahead of SaaS in the cloud war. However, the moot question is: Will SaaS overtake BPaaS as a driver for cloud growth? The chances of this happening in the foreseeable future appear slim unless cloud services take elasticity and metering seriously.  For BPaaS providers, those are the two needles to watch.

Which way do you see the cloud war going?

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[1] Forecast Overview: Public Cloud Services, Worldwide, 2011-2016, 2Q12 Update

[2] Cisco Global Cloud Index: Forecast and Methodology, 2011–2016: http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns1175/Cloud_Index_White_Paper.html

[3] Gartner Says Worldwide Cloud Services Market to Surpass $109 Billion in 2012 (quoted from Forecast Overview: Public Cloud Services, Worldwide, 2011-2016, 2Q12 Update): http://www.ospmag.com/osp-central/ospcentralfeature/gartner-says-worldwide-cloud-services-market-surpass-109-billion-2012

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