The Future of Cloud Computing

I recently presented a session on Cloud Computing at the 2012 Society for Technical Communications (STC) conference in Chicago. At the session, I went into some detail on our perspective on Cloud Computing and also how it specifically relates to Software as a Service (SaaS) and of course, to Author-it Cloud. The key message that I was trying to get across is “Cloud is now and Cloud is the future”. Five years from now we will all be using some form of Cloud infrastructure and taking advantage of a myriad of SaaS offerings. There are obviously concerns. This is only natural as we go through such a step change in the way we work with enterprise software. Having said that, the benefits in almost every case vastly outweigh the concerns when viewed objectively.

  • North Bridge Growth Equity Venture Partners, a prominent Silicon Valley investor in Cloud and SaaS, recently released their latest survey, Future of Cloud Computing 2012. It makes very interesting reading and fully supports our position that the move to the cloud is happening and is accelerating. Some of their key findings are worth discussing in more detail:
  •  Software = Cloud – North Bridge found that SaaS spending growth is now six times that of all software. This growth is forecast across a number of software categories including CMS. This is a big change from the early days of dominance by CRM, eCommerce and Social applications.
    Cloud Drivers – In my presentation I spoke of the drivers seen within the Author-it client base. First and foremost was supporting globally distributed teams. The ability to scale to other departments was a close second. It is “Scalability” and “Agility” that wins through in the North Bridge survey closely followed by “Cost” and “Capex to Opex”. One interesting facet completely missing is allowing the business unit to be able to work independent of IT support and cost. Maybe this is covered in the “Cost” line of the survey but we see a huge amount of frustration from our clients managing On-Premises infrastructure and working with their IT departments.
  • SaaS Rules – North Bridge quotes a Gartner 2011 survey which found that 84% of new software will be SaaS. I’m not sure of the relevance of this stat relative to a 2012 survey with new data. My feeling and observations in Silicon Valley is that this is a vast underestimate of the current state. It is hard to imagine anyone who is serious about launching a software business would not be taking advantage of the Cloud and using a SaaS model. Certainly I doubt that they would be funded.
  • Public vs. Private Cloud – Understandably there is a growing acceptance through experience with Public Cloud. Scalability and agility seem to be the main drivers for Public Cloud, while Security is a driver for those using Private Cloud. Having said that, the survey points to a number of hybrid infrastructure options that allow us to take advantage of both Public and Private Clouds for various requirements. Just out of interest Author-it Cloud runs on our Private Cloud infrastructure.
  • The Mission is Critical – The survey shows that the particular mission or application is highly relevant in a client’s acceptance of Cloud. Concerns over security and data sovereignty in certain applications remain. On all levels however the survey shows change in favor of Cloud. Those who perceive risk and wait for Cloud maturity (security and compliance) have reduced dramatically in number while those trialing and that now have “complete confidence” in Cloud has grown.
  • The Gap – There was an interesting variance between Cloud vendors and Cloud users in the term “complete confidence”. Understandable, and the survey delved into the reasons for this difference. This is great reading as a SaaS vendor as it points us to the areas we need to work on to increase confidence levels in our service. They listed; incomplete value propositions, business benefits, case studies, proof, and ROI. I agree with these points with some commentary. I think the first two are a universal marketing problem and not just one for Cloud vendors. I think in SaaS it is important to focus on separating the Cloud benefits from the underlying business value that you are delivering with your service. In time Cloud will be a given. It is really driving home the value to those that sign the checks that matters. I really like the last three points; case studies, proof and ROI. These, in my mind, are what our prospective clients are really looking for to support their decision to buy. “Show me it working, introduce me to someone that you have done this for before and convince me on the bottom line!!”
  • Work we have to do – North Bridge points out the factors inhibiting adoption. No surprise that Security and Data Sovereignty still top the list. Surprisingly even to my European colleagues, it seems that the EU is leading the way in breaking down national barriers and allowing a truly global vision for Cloud. Reported in TechWorld, Megan Richards, Deputy Director General of Information Society and Media for the European Commission stated, “You shouldn’t care where the data is as long as it is secure and meets regulatory requirements”. Continuing this line, Salesforce.com’s VP and Head of Platform Research, Peter Coffee asserted, “Data protection regulations based on physical location don’t make any sense. Clearly encrypted data with badly managed access privileges is dangerous no matter where it is, and well encrypted data with rigorous privilege management and strong mechanisms for auditing how privileges are used is safe,” said Coffee. “I could put an unencrypted hard drive mid-field in Wembley Stadium and be compliant, while the same data rigorously encrypted, but in Palo Alto, California, would be considered a grave threat.” Makes sense to me.

As a closing comment, the North Bridge survey shows venture capital investment in Cloud including SaaS has been growing at a dramatic rate climbing from $1.6B in 2010 to $2.4B in 2011. Investors by their very nature are forward looking and this alone points to growth in Cloud as investment money is used to improve services and launch a greater number of Cloud infrastructure and SaaS services. This is to the benefit of all involved; vendor and Cloud users alike. At Author-it we are very excited and proud to be part of the next wave of world class SaaS vendors and look forward to working with our current and future clients with Author-it Cloud.

Cheers

Steve