Some interesting research and guidance over June guaranteed to make Cloud planners even more confused shows that IaaS and PaaS appear to have a shelf-life while SaaS powers ahead, but even SaaS, as a proportion of the total market is still small. The findings challenge the “Cloud for Everything Eventually” theory, or at least, drive it out potentially another decade.

New research shows that the meteoric rise of Infrastructure and Platform as a Service could be slowing in the wake of Software as a Service.

Spending on Platform-as-a-Service and Infrastructure-as-as-Service is rapidly increasing, but will still add up to less than 10 per cent of the overall infrastructure services market by 2018, research from analyst firm TechMarketView has concluded.

Widespread uptake of the public cloud is not happening anytime soon, despite strong growth from the likes of Amazon Web Services, it added.

However, this is up from IaaS/PaaS accounting for just three per cent of the total infrastructure services market in 2014, the report, titled Public cloud providers: Unlocking enterprise spend, found. – Source

Server huggers rejoice! No, wait, don’t. Despite only accounting for three percent growing to ten percent by 2018 we are seeing falling figures in the server world. That makes sense, because the value in Cloud is not replicating your current infrastructure, it’s in changing the way that you do business, so if you can leapfrog to Software as a Service then you have a huge advantage.

Current thinking is changing from the Cloud journey, which less than two years ago, was virtualise, consolidate, migrate to IaaS, migrate to PaaS, and finally migrate to SaaS. Now clever organisations are leaping straight to SaaS, dropping the cost of that migration work and letting their infrastructure fall silent.

Things are a’ changing and part of the new confusion is that IaaS makers have been adding PaaS features, and PaaS players have been adding IaaS items. Even SaaS players are getting into the game. Saleforce.com, for instance, is making its platform more developer-friendly with PaaS features. This way you can modify your Salesforce.com application using the company’s own services. That is aside from its more pure-play Salesforce1 Platform PaaS offering. – Source

While that battle for the PaaS slice appears to be intensifying with IaaS providers reaching up into it and SaaS providers reaching down, the real story is SaaS.

We may have been talking about SaaS companies for more than a decade, but we’re still just at the beginning. The legacy software companies including Oracle, Microsoft, SAP and and IBM control 83% of the market cap of software businesses, representing $830B in market cap. The largest SaaS company, Salesforce, is just about half the size of SAP, and Microsoft is 8x bigger. – Source

Or to put it another way.

saas_legacy_mc_distribution

The potential for SaaS is then huge. On these figures, today, there is a potential $226B USD market for SaaS.

So what’s happening in the real world?

A lot of my customers started on the journey to IaaS, through PaaS, and to SaaS and have been surprised along the way. For government, at least in New Zealand, you can tack the move of data centres onto the front end of that journey (though that is now increasingly rare, as leaping that step to Cloud directly saves a tonne of time, cash, and transition complications.)

Three things are happening, at least locally, and given most of my clients are government, mostly government:

First, customers (IT) are adopting strategies to move from IaaS to SaaS, sometimes skipping PaaS in the middle. They are then shutting down the IaaS services as they move. PaaS tends to be used for development and business intelligence.

Second, customers (business not IT) are simply consuming Cloud services. This is creating some interesting conundrums for IT, particularly when the large shops suddenly discover that they have between three hundred and eight hundred SaaS services being consumed.

Finally, customers (IT) are moving to a Service Model with a strong underpinning of Orchestration thrown in (we’ll come back to Orchestration in the next few weeks when I can dig out a resident expert). That’s just to try and manage what is rapidly becoming the most complex mixture of technology and services we have ever seen.

To generalise, enterprises are faced with a business that is rapidly adopting SaaS and they are left to a) turn the lights out on unwanted infrastructure and b) restructure themselves to manage the myriad of services the business is consuming.

Who said Cloud was easy?

Bubbling around the edges is data. It’s all about the data. A lot of larger SaaS providers are taking a hit on the software angle, Xero is a good example, but they know that the data is worth gold.

Xero can aggregate Your non-personally identifiable data

By using the Service, You agree that Xero can access, aggregate and use non-personally identifiable data Xero has collected from You. This data will in no way identify You or any other individual. – Source

Now consider the data that the large SaaS providers hold…

One of the earliest glimmers of that data usage is appearing in government in New Zealand. Some large departments are starting to layer “artificial intelligence” Cloud services on top of their data. This is giving them insights that they haven’t seen before, which in turn, is likely to break some very basic business rules, all the way down to how government interfaces directly to their customers, in real-time.

But, large enterprises are still grappling with legacy business intelligence systems that often started on a server under a desk. Undoing those in order to unlock them for the future is unbelievably complicated. Basic rules that were first established on day one are either forgotten and / or become a hindrance to continued development.

Interesting times.

One comment

  1. In my industry i’m seeing more and more cloud service software options pop up, and some of these companies it’s obvious that they have no real longevity. I’m worried that there isn’t enough cross platform data backup services that allow people and companies to use these new business and not have to worry about losing their data overnight. I think It managers are becoming better equipped to avoid using PaaS, and find SaaS solutions that are better.

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