What is Happening?
As we noted last week, the end of each year tends to bring a fun, and often rewarding, look back at what we thought versus what has actually happened, and to make predictions about future directions and trends. This Research Alert is the second of a two-part series identifying the most impactful, emergent trends we see as clear and undeniable evidence of the emergent, and radical, transformation of IT and Business (1150RA, Looking Back and Forth: Ten Emergent Trends and Planning Positions for the 2013 Boundary-free Enterprise™, 06Dec2012).
In the spirit and context of looking back and forth, here’s a snapshot of previous Saugatuck predictions and expectations regarding Cloud IT, from SaaS to IaaS to PaaS. In 2008, we laid out a series of predictions for the 2011 – 2016 timeframe regarding SaaS and Cloud IT (486SSR, Enterprise Ready, or Not – SaaS Enters the Mainstream, 28July2008). Here’s the entire list of critical changes that we expected to see within that specified timeframe:
- End-to-End Business Processes sourced in and from the Cloud
- SaaS and business processes integrated w/ services, anywhere
- Intelligent Cloud hubs linking platforms
- Mobile device- and sensor-controllable Cloud solutions
- SLAs for composite Cloud service offerings
- Dynamically scalable, Cloud-based infrastructure
- Focus by Cloud providers on optimal enterprise business processes
This Research Alert continues that tradition of building on our research and analysis to develop fact-based expectations of future market realities, and continues the list that we began last week. Each expectation/trend is accompanied by a Saugatuck Strategic Planning Position (SPP) that lays out specific expectations regarding its relevant impact and timing.
- Loosely-coupled business suites become the “go-to” Cloud solution. The center of Cloud solution buyer demand will continue to shift toward functional suites over best-of-breed solutions, especially with the increasing focus on core systems of record – but yesteryear’s single-vendor, monolithic architectures is a thing of the past. SPP: Through at least YE2017, loosely-coupled architectures will rule the day.
- Master Data Management re-emerges as mission-critical. The explosive growth and interdependency of data in the Cloud has increased the traditional need for disciplined data quality practices. SPP: Beginning in 2012 and through at least YE2017, Master Data Management will be a critical competency required for enterprises seeking competitive advantage, then competitive presence, via Cloud.
- Decline of on-premises SI and outsourcing. Enterprises are moving extremely rapidly more toward Cloud and hybrid on-premises+Cloud IT and business environments (1078MKT, Business Apps Reality Check: On-prem to Cloud by YE2016?, 31May2012). This will have a significant impact on the business and delivery models of traditional SI and outsourcing providers – including the necessity to create lower margin Cloud-enablement services, and to invest in the creation of differentiable and vertically-focused IP. SPP: Beginning in 2013 and continuing through at least the next five years, traditional on-premises systems integration and outsourcing provider revenue will tail downward for the first time.
- Mobile commerce, including mobile payments, will transform online buying. While, as we have noted, social factors will drive mobile commerce initially – e.g., Facebook’s impending gifts program, and the more social aspects of Amazon – and will enable instantaneous purchases from anywhere, mobile commerce also reduces online shopping while enabling buying. When people make purchases on mobile devices, certain limiting factors (time, patience, screen size) make it harder for them to browse and add more items to their shopping carts. SPP: Through 2017, mobile commerce software and devices, like credit cards, will prove to be a phenomenon for reducing friction in buying, but not in increasing overall revenues. SPP: Mobile payments solutions will proliferate across retail commerce through 2017, although their use will still be sporadic until 2015, but will, inexorably, transform buying behavior both on line and in the street.
- Cloud platforms, hubs and solutions will accelerate and proliferate rapidly within industry-specific / vertical markets. Relevant examples include PivotLink for retail analytics, and Veeva for life sciences CRM, as Cloud vendors facing market challenges evolve their go-to-market strategies toward specialization, instead of generalization, to move up the value-chain in a more defined market segment. SPP: Through 2017, industry-specific Cloud platform “beachheads” will help newer Cloud vendors differentiate by better meeting the specific needs of targeted customer segments.
- The rise of sensor data and the “internet of things” will flourish. Though this trend has really been in the making for years at organizations as varied as GE, IBM and Rossignol, the emergent Cloud / Mobile / Social / Analytics-centric master architecture offers a new way of consuming, processing, and delivering the data that is generated by a wide variety of sensors. The last 2-3 years have already witnessed the explosion of Big Data-systems designed to allow the rapid and efficient analysis of large, complicated datasets such as social media streams or clickstream traffic – which has led to radically new ways of engaging with customers, and customer retention strategies. SPP: Through 2017, the rise of sensor data will trigger a new wave of analytics-based systems designed to enable more successful customer targeting and customer engagement.
- Business workflows will drive social networking ROI. The real value of enterprise social networks will not be realized until they become integrated with business workflows and enable workflow-based collaboration, facilitating decision-making and information sharing in support of that. SPP: Through 2017, the most productive use of social networking will be in redefining business workflows around information and information workers.
- Enterprise Apps will go mobile – in a huge way. While consumer-oriented mobile apps have flourished over the past three years, mobile interfaces to enterprise solutions have not yet become a major influence, largely because they have been added as an afterthought, rather than designed-in; however, that is now changing. SPP: Through 2017, a majority of Cloud business solutions for the enterprise, whether SaaS or in-house developed, will enable mobile access and interaction as a core design point.
- Money Apps will move to the Cloud – increasingly through new channels. To date, on-premises solutions closer to “the money,” e.g., Finance / Accounting, Budgeting, Reporting & Planning and GRC, have been slower to migrate to Public and Private Clouds, especially in larger enterprises. However, this is about to change. SPP: Beginning in 2013 and increasingly rapidly by 2015, “money” applications will move to the Cloud, to the point where a majority of new such application deployment will be Cloud-based by YE 2017.This will be driven in part by enterprise moves toward vertical / industry-specific providers, including platform providers / aggregators, managed service providers, VARs and SIs as providers of Cloud solutions and related services.
- ISV transitions to the Cloud will accelerate over the next three years, as traditional ISVs implement hybrid and pureplay architectures meeting the evolved needs of their customers. However, the challenge of moving to the Cloud over the next several years will be significantly different from the first few waves of Cloud transition, in part due to newer technologies available to support the transition and in part due to new expectations regarding mobility, social/collaborative and analytics in the Boundary-free Enterprise. SPP: By 2015, more than 75 percent of traditional ISVs will have launched Cloud-based versions of their core solutions, or in adjacencies.
Why is it Happening?
The acceleration of enterprise Cloud adoption and use, especially for enterprise-class business management and operational solutions, is already exceeding all but the most aggressive predictions. In 2008, we illustrated and explained to our clients how and why Cloud IT, especially SaaS, was already part of “mainstream” enterprise business operations, whether or not the enterprise was ready for Cloud (486SSR, Enterprise Ready, or Not – SaaS Enters the Mainstream, 28July2008). We saw the key events unfolding and laying the foundation for where we are today: The proliferation of SaaS / Cloud platform providers, the penetration of SaaS into core business systems and processes, and the mass migration of ISVs toward SaaS / Cloud offerings that complemented, then extended, enterprise-class business management capabilities.
In short, this has been coming for a while. Those who have been able to see and understand it have been able to accommodate, adapt, and prosper. Those surprised by current events should note that they are already behind the adoption curve, and risk experiencing a growing competitive disadvantage.
Market Impact While we have a pretty good track record of figuring out and explaining what’s happening, when, and why, we also have to temper everything we offer with the following caveat: Cloud changes everything. The scope and impact of Cloud so far has been much broader and deeper in less time than any previously experienced IT or business disruption.
The impact of that scope, pace, and force of Cloud-driven change on those responsible for managing IT and business can be likened to learning to fly a helicopter based on decades of riding a bicycle. The impact on established IT providers of almost any stripe and size can be likened to building ever-larger and more powerful helicopters based on decades of experience building motorcycles. And for users, the impact can be likened to riding Space Mountain after decades of riding the merry-go-round.
In short: Strap in, it’s going to be just like last year. Only faster, bigger, and wilder than anything we’ve seen yet.