The first day of British Summer - One big Stratus Cloud!
The trouble with the Internet is that when something gets put up, it tends to stay – for a long time. And when you put something up – which in context can be valid – it lingers around for people to use years later. So perhaps when Bill Gates stated in the early 80’s that “640K (memory) ought to be enough for anybody”, it’s come back to haunt him a touch – a statement he now claims he never made, but thanks to the Internet it’s always going to be attached to him, true or not. By 1993 Bill (allegedly) gave us another corker “the Internet? We are not interested in it”. How times have changed. As I was doing some research this week I came across this interview published on ZDNet. Harry Debes, of Lawson software didn’t look like he was having much time for SaaS, with the article heading “SaaS industry will collapse in two years”. Then I checked out that Harry made these claims back in August 2008. So come the end of August this year it looks like these words will come back to haunt, although i would guess by now he has adapted his business and won’t be losing so much sleep over it. In the article some very good and valid points are made. SaaS or Cloud computing are newer terms, but we’ve seen the principals time and time before. Two years on from these claims, SaaS seems very much alive. Let’s take a second to look at a few recent figures:
- Gartner 2009 – SaaS industry accounts for $8Billion (USD) per annum
- Gartner 2009 – SaaS growth rates are approximately 22% worldwide
- IDC 2009 – 76% of US organisation use SaaS applications in business
- May 2010 – IBM Acquire Stirling Commerce for $1.4 Billion to grow it’s cloud based integration business (only weeks after acquiring Cast Iron Systems)
- May 2010 – Accenture buys CadenceQuest (SaaS) in a bid to boost its Interactive digital marketing portfolio
Gartner Emerging Technology Hype Cycle 2009 - Cloud Computing heading for the peak - and then trough?
A quick snapshot of recent headlines shows us that not only is SaaS growing (22% could be considered modest from a low base – but in these economic times?), but the larger classic vendors are adjusting their strategies and acquiring organisations to integrate and solidify their SaaS strategies for future growth. It would look somewhat as if organisations such as IBM have firstly identified that SaaS isn’t going to be dead in two years, and secondly after the economic woes, they are picking out the best survivors to help them achieve their visions and goals for SaaS revenue projections over the next five to ten years.
Recently you may have heard Mike Hickey (PBBI’s President) talking to Directions Magazine around how we are altering our investment to prepare for life in the cloud. This is in no small part seen by MapInfo Stratus, delivering location intelligence in the cloud. As I’ve stated before, what life in “the cloud” will really look like is still being defined, and I would predict for some time to come a mixture of data and software on and off premise. What is perhaps driving this most is something which wasn’t so visible a couple of years back. Crippling levels of debt, both at an organisation and government level has led to companies needing to cut back on cost. When PBBI put out a paper a couple of months back on the seven must haves of SaaS, i said that while we could consider them equally, the fact is that one is way more equal than the others – Cost Savings. Yes of course people expect the user experience, functionality, security and so on. But if it saves money, that will be the driving factor. I speak to many organisations all over the world, and as IT directors are establishing strategies for the coming five years in the face of increasing cuts, this is what will push SaaS in all areas of IT up the agenda.
But it’s not all about cost. What else has happened in the past couple of years that means SaaS hasn’t died (although a lot could happen before August!). Well I would suggest that in many areas of the world we are experiencing four things actually coming together to make it viable:
- Software - Arguably the software was more than capable a couple of years ago, but modern software architecture (web services) and Web 2.0 (apologies for the term) designed for use over the web make the software much more viable. In a GIS world the emergence of technologies such as tile servers helps decrease the data sizes coming and going across the pipes meaning we no longer have time to make a cup of tea before that image refreshes.
- Hardware - The cost of computing hardware continues to decline whilst processor power continues to go up. But from an organisations perspective, it’s not just the purchase of the kit, but the management and maintenance of them which sends the annual operating cost well into the $1000’s. But the emergence of server farms taking care of back ups, and fail over makes this “hidden” cost of buying software a key asset.
- Infrastructure - In my opinion the biggy. Each year we see more and more locations around the world not just connected to the internet, but connected with speeds acceptable for everyday working. While South Korea leads the way globally with speeds of up to 1000Mb/s, a growing number of nations are seeing broadband infrastructure increase. With government schemes ensuring all areas are accesible and telco operators investing in things like fibre to home, this again is something which will only get better. One addition to this will be mobile, whereby both handset advancements and software will combine with 3G and 4G networks to make mobile the way we consume the web.
- Market conditions – And the final ingrediant to the melting pot is market conditions. Two years ago businesses may have raised an eyebrow at SaaS, with a wait and see approach. Today after a severe recession and the prospect of a long road to full recovery more and more businesses are open to new appraoches, in particular those that bring cost savings.
As we look at things like Gartner hype cycles and new and emerging trends it is often difficult to predict what will live and what will die. In technology terms things like the netbooks are already stated to be “dead” because there is some new fad around tablet devices. Who wants a Macbook air now I can have £600 ebook reader? Either way the past couple of years have shown that this time SaaS is here to stay (probably) but it has taken a unique set of conditions to make that happen. Equally just as five years ago many predicted that desktop sofware would be gone by now and everything browser based hasn’t happened, so this time we’ll live with a mix of on and off premise applications and data. Spatially and non spatially we continue to see a rise in the amount of data being collated, processed and stored. I believe this is magnified in the spatial world as we collect more elevation data, more imagery and so on, so it makes sense to be storing this in big central units, even better, consuming as much of this as possible direct from the source.
Like a good British Summer – the clouds are here to stay.
Chris M
Note – Should the entire SaaS market collapse before August, this article will be removed and you will forget ever reading it.
