Welcome!

@CloudExpo Authors: Mark Herring, Gopala Krishna Behara, Sridhar Chalasani, Tirumala Khandrika, John Katrick

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
With tough new regulations coming to Europe on data privacy in May 2018, Calligo will explain why in reality the effect is global and transforms how you consider critical data. EU GDPR fundamentally rewrites the rules for cloud, Big Data and IoT. In his session at 21st Cloud Expo, Adam Ryan, Vice President and General Manager EMEA at Calligo, examined the regulations and provided insight on how it affects technology, challenges the established rules and will usher in new levels of diligence arou...
In his general session at 21st Cloud Expo, Greg Dumas, Calligo’s Vice President and G.M. of US operations, discussed the new Global Data Protection Regulation and how Calligo can help business stay compliant in digitally globalized world. Greg Dumas is Calligo's Vice President and G.M. of US operations. Calligo is an established service provider that provides an innovative platform for trusted cloud solutions. Calligo’s customers are typically most concerned about GDPR compliance, application p...
"I focus on what we are calling CAST Highlight, which is our SaaS application portfolio analysis tool. It is an extremely lightweight tool that can integrate with pretty much any build process right now," explained Andrew Siegmund, Application Migration Specialist for CAST, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
As many know, the first generation of Cloud Management Platform (CMP) solutions were designed for managing virtual infrastructure (IaaS) and traditional applications. But that's no longer enough to satisfy evolving and complex business requirements. In his session at 21st Cloud Expo, Scott Davis, Embotics CTO, explored how next-generation CMPs ensure organizations can manage cloud-native and microservice-based application architectures, while also facilitating agile DevOps methodology. He expla...
SYS-CON Events announced today that Evatronix 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. Evatronix SA offers comprehensive solutions in the design and implementation of electronic systems, in CAD / CAM deployment, and also is a designer and manufacturer of advanced 3D scanners for professional applications.
SYS-CON Events announced today that Synametrics Technologies will exhibit at SYS-CON's 22nd International Cloud Expo®, which will take place on June 5-7, 2018, at the Javits Center in New York, NY. Synametrics Technologies is a privately held company based in Plainsboro, New Jersey that has been providing solutions for the developer community since 1997. Based on the success of its initial product offerings such as WinSQL, Xeams, SynaMan and Syncrify, Synametrics continues to create and hone inn...
Cloud Expo | DXWorld Expo have announced the conference tracks for Cloud Expo 2018. Cloud Expo will be held June 5-7, 2018, at the Javits Center in New York City, and November 6-8, 2018, at the Santa Clara Convention Center, Santa Clara, CA. Digital Transformation (DX) is a major focus with the introduction of DX Expo within the program. Successful transformation requires a laser focus on being data-driven and on using all the tools available that enable transformation if they plan to survive ov...
A strange thing is happening along the way to the Internet of Things, namely far too many devices to work with and manage. It has become clear that we'll need much higher efficiency user experiences that can allow us to more easily and scalably work with the thousands of devices that will soon be in each of our lives. Enter the conversational interface revolution, combining bots we can literally talk with, gesture to, and even direct with our thoughts, with embedded artificial intelligence, whic...
To get the most out of their data, successful companies are not focusing on queries and data lakes, they are actively integrating analytics into their operations with a data-first application development approach. Real-time adjustments to improve revenues, reduce costs, or mitigate risk rely on applications that minimize latency on a variety of data sources. In his session at @BigDataExpo, Jack Norris, Senior Vice President, Data and Applications at MapR Technologies, reviewed best practices to ...
DevOps promotes continuous improvement through a culture of collaboration. But in real terms, how do you: Integrate activities across diverse teams and services? Make objective decisions with system-wide visibility? Use feedback loops to enable learning and improvement? With technology insights and real-world examples, in his general session at @DevOpsSummit, at 21st Cloud Expo, Andi Mann, Chief Technology Advocate at Splunk, explored how leading organizations use data-driven DevOps to close th...
Continuous Delivery makes it possible to exploit findings of cognitive psychology and neuroscience to increase the productivity and happiness of our teams. In his session at 22nd Cloud Expo | DXWorld Expo, Daniel Jones, CTO of EngineerBetter, will answer: How can we improve willpower and decrease technical debt? Is the present bias real? How can we turn it to our advantage? Can you increase a team’s effective IQ? How do DevOps & Product Teams increase empathy, and what impact does empath...
Smart cities have the potential to change our lives at so many levels for citizens: less pollution, reduced parking obstacles, better health, education and more energy savings. Real-time data streaming and the Internet of Things (IoT) possess the power to turn this vision into a reality. However, most organizations today are building their data infrastructure to focus solely on addressing immediate business needs vs. a platform capable of quickly adapting emerging technologies to address future ...
Most technology leaders, contemporary and from the hardware era, are reshaping their businesses to do software. They hope to capture value from emerging technologies such as IoT, SDN, and AI. Ultimately, irrespective of the vertical, it is about deriving value from independent software applications participating in an ecosystem as one comprehensive solution. In his session at @ThingsExpo, Kausik Sridhar, founder and CTO of Pulzze Systems, discussed how given the magnitude of today's application ...
There is a huge demand for responsive, real-time mobile and web experiences, but current architectural patterns do not easily accommodate applications that respond to events in real time. Common solutions using message queues or HTTP long-polling quickly lead to resiliency, scalability and development velocity challenges. In his session at 21st Cloud Expo, Ryland Degnan, a Senior Software Engineer on the Netflix Edge Platform team, will discuss how by leveraging a reactive stream-based protocol,...
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...
In his session at 21st Cloud Expo, Raju Shreewastava, founder of Big Data Trunk, provided a fun and simple way to introduce Machine Leaning to anyone and everyone. He solved a machine learning problem and demonstrated an easy way to be able to do machine learning without even coding. Raju Shreewastava is the founder of Big Data Trunk (www.BigDataTrunk.com), a Big Data Training and consulting firm with offices in the United States. He previously led the data warehouse/business intelligence and B...
Digital transformation is about embracing digital technologies into a company's culture to better connect with its customers, automate processes, create better tools, enter new markets, etc. Such a transformation requires continuous orchestration across teams and an environment based on open collaboration and daily experiments. In his session at 21st Cloud Expo, Alex Casalboni, Technical (Cloud) Evangelist at Cloud Academy, explored and discussed the most urgent unsolved challenges to achieve f...
"Digital transformation - what we knew about it in the past has been redefined. Automation is going to play such a huge role in that because the culture, the technology, and the business operations are being shifted now," stated Brian Boeggeman, VP of Alliances & Partnerships at Ayehu, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
You know you need the cloud, but you're hesitant to simply dump everything at Amazon since you know that not all workloads are suitable for cloud. You know that you want the kind of ease of use and scalability that you get with public cloud, but your applications are architected in a way that makes the public cloud a non-starter. You're looking at private cloud solutions based on hyperconverged infrastructure, but you're concerned with the limits inherent in those technologies. What do you do?
"We started a Master of Science in business analytics - that's the hot topic. We serve the business community around San Francisco so we educate the working professionals and this is where they all want to be," explained Judy Lee, Associate Professor and Department Chair at Golden Gate University, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.