Welcome!

@CloudExpo Authors: Pat Romanski, Liz McMillan, Elizabeth White, Larry Alton, Patrick Hubbard

Related Topics: @CloudExpo

@CloudExpo: Blog Feed Post

Can the Real Cloud Market Size Please Stand Up?

Making sense of market numbers

It seems like every week another sizing of the cloud market is published, and – maybe as to be expected - none of them seem to agree.

Let’s have a look at who is saying what, and whether we are comparing apples to apples, or apples and oranges.

We will start by looking at SaaS. The most recent numbers from IDC claim that SaaS revenue will grow 5 times faster than traditional packaged software. This would mean little if traditional packaged software is expected to no longer grow (five times zero would still be zero). Joe McKendrick at ZDNet took IDC’s numbers and extrapolated from them that “very soon, a third of all software will be delivered via cloud.”

This seems to directly contradict Gartner numbers from just a month earlier. In June Gartner released a report stating that “Software as a service (SaaS) will have a role in the future of IT, but not the dominant future that was first thought.” In the same report, Gartner notes that some of the bad habits of the traditional software market - like massive shelf-ware as a result of the desire to get higher discounts by closing enterprise license agreements – have also entered the cloud market. In the press release about the report, Gartner predicts the SaaS market will reach $8.8 billion in 2010 while IDC talks about $13.1 billion SaaS revenue in 2009. I am sure there are some definition differences, but a $5 billion difference on something that they both call “WW SaaS revenue” seems statistically significant, or does it?

One explanation is that IDC specifically includes a large expected growth in SaaS management software, in addition to SaaS application software. The reason is the technology –specifically network technology is now ready for SaaS delivered functionality like remote monitoring and remote configuration management. This is significant because unlike you may expect, the market for “management software” is actually bigger than the market for “application software.” About 10 years ago, incidentally about the same time I moved jobs from ERP to system software, the cost of IT management surpassed the cost of IT applications. So there is a clearly a reason why everyone is so enthusiastic about cloud computing (running this stuff yourself is simply too expensive).

But back to the numbers (working for a software vendor you can understand why we have some interest in these). If SaaS revenue indeed exceeds traditional software within a few years, would that be relevant? Well, not really, because what makes up a SaaS fee is different from a traditional software fee. SaaS includes hosting (hardware), network, backup, new releases, support, change management etc. Software costs may actually be only 10 to 20% of the total. Ideally we should compare SaaS costs with the TCO (Total Cost of Ownership) of applications. This would be a good idea, if people actually knew the TCO of their applications. But that is another topic all together.


What a difference a day makes!
When we look at the total cloud market the differences were even more astounding. Within a day of each other Gartner estimated the Cloud market to be $148 billion by 2014. This basically contradicts IDC, which just two days earlier estimated $55 billion in 2014. John Treadway highlights one reason why the Gartner numbers are so high in in his post “Why Gartner’s Cloud Numbers Don’t Add Up (Again!)”. He points out that Gartner includes Google AdWords advertising revenue in their cloud market numbers.

So, at the high level, these numbers do not add up. But that is not such a big issue because if you take a close look at individual markets, you see huge differences in SaaS adoption. For example, most customers now use SaaS solutions for Project and Portfolio Management (PPM), while still relying on on-premise solutions for PC configuration, anti-virus and ERP. While PC configuration was mainly held back by technical limitations, ERP suffered more from the traditional attitude of typical ERP buyers. As usual, the technical limitations around the first are likely to be resolved faster, than the user culture issues around ERP.

In the end, trying to put a number on cloud adoption or the overall market opportunity for cloud can feel like we’re looking into a crystal ball. We can even say that the numbers are not of much help. Cloud is growing fast – on that point it seems industry analysts, vendors and end users all agree -- but exactly how fast we will not know for sure until after it has happened. For many looking to rely on these numbers for strategic, operational or market planning, this may seem like an issue, but we should ask ourselves, is it really? Consider this: Two shoe salesmen flew into a third world country. After getting off the plane, both phoned their home offices. One said “I am coming back home, because nobody wears shoes here,” while the other salesman sent a telegram asking for more supplies and five colleagues to join him. He saw a huge market opportunity because nobody wears shoes there!). Same data, different conclusion.

It’s also wise to look at what we’re comparing. In the cloud market, it does not really matter whether cloud is bigger than traditional software (as we know it today) in 2014 or 2040. Instead, what does matter is that we’re focusing on investing more in functionality that does great things for the business rather than focusing on the gear that manages the plumbing.

Read the original blog entry...

More Stories By Gregor Petri

Gregor Petri is a regular expert or keynote speaker at industry events throughout Europe and wrote the cloud primer “Shedding Light on Cloud Computing”. He was also a columnist at ITSM Portal, contributing author to the Dutch “Over Cloud Computing” book, member of the Computable expert panel and his LeanITmanager blog is syndicated across many sites worldwide. Gregor was named by Cloud Computing Journal as one of The Top 100 Bloggers on Cloud Computing.

Follow him on Twitter @GregorPetri or read his blog at blog.gregorpetri.com

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


@CloudExpo Stories
Cloud-based disaster recovery is critical to any production environment and is a high priority for many enterprise organizations today. Nearly 40% of organizations have had to execute their BCDR plan due to a service disruption in the past two years. Zerto on IBM Cloud offer VMware and Microsoft customers simple, automated recovery of on-premise VMware and Microsoft workloads to IBM Cloud data centers.
Why Federal cloud? What is in Federal Clouds and integrations? This session will identify the process and the FedRAMP initiative. But is it sufficient? What is the remedy for keeping abreast of cutting-edge technology? In his session at 21st Cloud Expo, Rasananda Behera will examine the proposed solutions: Private or public or hybrid cloud Responsible governing bodies How can we accomplish?
SYS-CON Events announced today that Daiya Industry will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Daiya Industry specializes in orthotic support systems and assistive devices with pneumatic artificial muscles in order to contribute to an extended healthy life expectancy. For more information, please visit https://www.daiyak...
The last two years has seen discussions about cloud computing evolve from the public / private / hybrid split to the reality that most enterprises will be creating a complex, multi-cloud strategy. Companies are wary of committing all of their resources to a single cloud, and instead are choosing to spread the risk – and the benefits – of cloud computing across multiple providers and internal infrastructures, as they follow their business needs. Will this approach be successful? How large is the ...
Enterprises are moving to the cloud faster than most of us in security expected. CIOs are going from 0 to 100 in cloud adoption and leaving security teams in the dust. Once cloud is part of an enterprise stack, it’s unclear who has responsibility for the protection of applications, services, and data. When cloud breaches occur, whether active compromise or a publicly accessible database, the blame must fall on both service providers and users. In his session at 21st Cloud Expo, Ben Johnson, C...
In his session at @ThingsExpo, Greg Gorman is the Director, IoT Developer Ecosystem, Watson IoT, will provide a short tutorial on Node-RED, a Node.js-based programming tool for wiring together hardware devices, APIs and online services in new and interesting ways. It provides a browser-based editor that makes it easy to wire together flows using a wide range of nodes in the palette that can be deployed to its runtime in a single-click. There is a large library of contributed nodes that help so...
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend 21st Cloud Expo October 31 - November 2, 2017, at the Santa Clara Convention Center, CA, and June 12-14, 2018, at the Javits Center in New York City, NY, and learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
Many organizations adopt DevOps to reduce cycle times and deliver software faster; some take on DevOps to drive higher quality and better end-user experience; others look to DevOps for a clearer line-of-sight to customers to drive better business impacts. In truth, these three foundations go together. In this power panel at @DevOpsSummit 21st Cloud Expo, moderated by DevOps Conference Co-Chair Andi Mann, industry experts will discuss how leading organizations build application success from all...
Most of the time there is a lot of work involved to move to the cloud, and most of that isn't really related to AWS or Azure or Google Cloud. Before we talk about public cloud vendors and DevOps tools, there are usually several technical and non-technical challenges that are connected to it and that every company needs to solve to move to the cloud. In his session at 21st Cloud Expo, Stefano Bellasio, CEO and founder of Cloud Academy Inc., will discuss what the tools, disciplines, and cultural...
The “Digital Era” is forcing us to engage with new methods to build, operate and maintain applications. This transformation also implies an evolution to more and more intelligent applications to better engage with the customers, while creating significant market differentiators. In both cases, the cloud has become a key enabler to embrace this digital revolution. So, moving to the cloud is no longer the question; the new questions are HOW and WHEN. To make this equation even more complex, most ...
As DevOps methodologies expand their reach across the enterprise, organizations face the daunting challenge of adapting related cloud strategies to ensure optimal alignment, from managing complexity to ensuring proper governance. How can culture, automation, legacy apps and even budget be reexamined to enable this ongoing shift within the modern software factory?
SYS-CON Events announced today that App2Cloud will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct. 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. App2Cloud is an online Platform, specializing in migrating legacy applications to any Cloud Providers (AWS, Azure, Google Cloud).
Agile has finally jumped the technology shark, expanding outside the software world. Enterprises are now increasingly adopting Agile practices across their organizations in order to successfully navigate the disruptive waters that threaten to drown them. In our quest for establishing change as a core competency in our organizations, this business-centric notion of Agile is an essential component of Agile Digital Transformation. In the years since the publication of the Agile Manifesto, the conn...
WebRTC is great technology to build your own communication tools. It will be even more exciting experience it with advanced devices, such as a 360 Camera, 360 microphone, and a depth sensor camera. In his session at @ThingsExpo, Masashi Ganeko, a manager at INFOCOM Corporation, will introduce two experimental projects from his team and what they learned from them. "Shotoku Tamago" uses the robot audition software HARK to track speakers in 360 video of a remote party. "Virtual Teleport" uses a mu...
Internet of @ThingsExpo, taking place October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 21st Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devic...
Mobile device usage has increased exponentially during the past several years, as consumers rely on handhelds for everything from news and weather to banking and purchases. What can we expect in the next few years? The way in which we interact with our devices will fundamentally change, as businesses leverage Artificial Intelligence. We already see this taking shape as businesses leverage AI for cost savings and customer responsiveness. This trend will continue, as AI is used for more sophistica...
21st International Cloud Expo, taking place October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Me...
Trying to improve density, lower costs and run applications faster than before? Today, enterprises looking for a secure cloud strategy are increasingly turning to container-based Platform as a Service solutions for on-premises hosted DevOps. In her session at 21st Cloud Expo, Alise Cashman Spence, Offering Manager, Power Systems Cloud Solutions at IBM, will discuss the driving factors behind these cloud trends and how IBM customers are realizing exceptional performance, security and control for ...
DevOps is often described as a combination of technology and culture. Without both, DevOps isn't complete. However, applying the culture to outdated technology is a recipe for disaster; as response times grow and connections between teams are delayed by technology, the culture will die. A Nutanix Enterprise Cloud has many benefits that provide the needed base for a true DevOps paradigm. In their Day 3 Keynote at 20th Cloud Expo, Chris Brown, a Solutions Marketing Manager at Nutanix, and Mark Lav...
SYS-CON Events announced today that SourceForge has been named “Media Sponsor” of SYS-CON's 21st International Cloud Expo, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. SourceForge is the largest, most trusted destination for Open Source Software development, collaboration, discovery and download on the web serving over 32 million viewers, 150 million downloads and over 460,000 active development projects each and every month.