Jay Leonard
There is a reason why cloud computing is constantly being talked about in the business world today – it’s making a big impact across industries and businesses of all sizes. Cloud implementations are rewarding companies with lower costs and increased speed and efficiency and according to Erik Berggren, VP of customer results and global research at Success Factors (an SAP company), and Don Huesman, managing director of the Innovation Group at the Wharton School of the UPenn, cloud is clearly here to stay.
Berggren refers to the future of cloud as “very, very bullish.” Cloud adoption is growing at a rate of five to eleven times faster than traditional software and a large portion of IT budgets are increasingly moving over to the cloud. This growth can be attributed to the lower barriers to entry and lower switching costs, which are sparking much more development and activity in the cloud. According to Huesman, there is a growing interest in creating smaller applications that are regularly distributed, rather than large scale application suites. This leads to a more broadly defined portfolio of smaller products.
A Different Generation of Applications
By replacing traditional applications and processes with software as a service (SaaS) applications, business can deliver applications faster, cheaper and with the risk borne by the vendor. “What we are building for the future is a whole slew of applications; it’s a whole generation different,” Berggren says.
What this means is that data received from applications will be much more contextualized, combining data from other places on the internet with the data on your cloud installation. It also allows data to move between applications and mobile devices. This contextualized data integration will provide businesses with better data to make more informed decisions and allow instant benchmarking. According to Berggren, businesses will get used to this and start to expect it from their IT applications.
A New Economy
We are witnessing a transition into a “subscription economy” where purchasing and owning software is no longer desirable and the emphasis has shifted from products to services. These assets become more like liabilities, dragging businesses down. Consumers and businesses want strong computing power, which enables them to get things done quickly and provides answers to their questions and access to content and applications on multiple devices. A downward price pressure will also be an influential factor driving cloud computing in this new type of economy. Consumers now want inexpensive applications that are available on their mobile devices.
As a result of these driving forces, the vendor landscape will change as they work to build applications that support the companies and consumers within the subscription-based economy. This means providing quick, instant utility. Huesman claims, “The days of having front-loaded initial expenditure on a large product that you own and pay maintenance on is over. A much more economical approach to a subscription based service is in our future.” The power has moved to the consumer; it is their wallets that will dictate the rules for the business world. The customer is now king.
Watch the full interview with Erik Berggren and Don Huesman on the future of cloud computing here.
For more research on the future of cloud computing check out:
The Cloud Is Here With Plenty of Growth Coming [Slides]
Gartner Puts Numbers To Their Forecast For Cloud Computing
SAP and [email protected] are collaborating on a project on cloud computing, one of the fastest-growing areas in IT today. They invite you to watch videos with experts at SAP and Wharton discussing this trend and to take a short survey. Participants in the benchmarking survey will be eligible to win a Kindle Fire and also receive a copy of the results. Complete the survey by clicking here.
This article was written for Business 2 Community by Jay Leonard.
Learn how to publish your content on B2C
Join our Telegram channel to stay up to date on breaking news coverage
Add B2C to your Google News Feed
One thing that constantly gets glossed over is who this statement applies to: “…where purchasing and owning software is no longer desirable…” Few consumers find this attractive and fewer still find subscriptions desireable. It is desireable for the programmer/publisher and few others. Companies may also see benefit in the move from CAPEX costs to OPEX costs associated with the move. However, the end user/consumer looses out on any software not heavily used during the subscription period. How many people use Office products at home on a daily basis? Of the remaining, how many need it occasionally? I don’t know the exact numbers for the first question, but the second answer is almost all of them. Sure there are some advantages, but do those advantages outweigh the costs related to subscriptions? What about avaialability? 99.9999% uptime doesn’t help when the planned downtime for upgrade happens right when you want to use the software. Moreover, 99.9999% uptime does not (usually) include planned outage times, otherwise that percentage goes down drastically. With consumer owned software, planned outages are always down during convienient times for the customer, by definition, because they control those times. Network dependence is another issue. Many people and businesses have/use consumer grade ISP services with less than stellar throughput. These cause a LOT of frustration when trying to use software subscriptions, especially when they are sensative to latency (read games). Subscription based software is here, and here to stay, but it isn’t due to consumer desires. It is most definitely publisher desires defining this movement.