Last Tuesday I was on a panel discussion that focused on cloud computing innovations. The panel was part of Saugatuck Technology’s Cloud Business Summit that was held in NY. A brief write-up of the entire conference can be found here. The panel was asked to address several questions such as:
- Over the next 5 years, what are the key business technologies that will be the most impactful in, and impacted by, the Cloud?
- How will the consumerization of IT shape how we interface, interact with and profit from Cloud?
- Who will be the next big Cloud players – where will they come from and how will they change what we already do?
In my remarks I indicated that through our SaaS portfolio companies we are seeing increasing and accelerating adoption of cloud computing. Companies of different sizes, during the last year increasingly from the Fortune 500, and from different industries are already rolling out or seriously considering SaaS applications to address their business needs. The drivers for this adoption include a need to reduce the total cost of application ownership, and the need to push sophisticated tools to every part of the enterprise. It is becoming clear that enterprises want deployment options for the SaaS applications they adopt. In the next 2-5 years SaaS applications will be deployed in public, private and hybrid clouds. The use of cloud computing, commodity hardware and of standards-based IT stacks will contribute to decreasing data center operating costs, estimated to drop by 5-25% over the next 5 years.
In the same period we also expect an increasing number of SaaS applications to be developed and tested on top of a PaaS such as Azure, and other applications to be deployed on top of IaaS platforms such as Amazon’s or Rackspace’s. There will also be increasing use of Amazon’s AWS service to test application functionality and configurability, and in order to address spikes in application usage. Finally, we expect that corporate IT and third-party application vendors will increase their focus on integration between on-premise and on-demand applications by building more around standards, data security and privacy, as well as on SaaS application adherence to corporate risk and compliance policies.
During the initial phase of investing in SaaS (which lasted roughly until 2008) we focused on companies whose cloud-based applications implemented well-understood business processes, such as sales force automation, employee management, spend management, inventory management, etc. More recently we have been investing in companies that develop applications combining aspects of cloud computing, the social web (we view Facebook emerging as the next web platform in the same way Google emerged as such a platform 8 years ago) and mobile computing to address novel business process. For example, we invested in Extole that has developed a SaaS application for social marketing, 8thbridge that has developed a SaaS application for social commerce, and Turn, Exelate, and JiWire that have developed SaaS applications that address various processes in online advertising. We have also been considering investments in companies that develop solutions managing, utilizing or analyzing data from the Internet of Things.
We are paying particular attention to mobile devices and mobile computing. During 2011 for the first time the shipment of mobile devices (smartphones and tablets) will surpass that of PCs. Consumer use of these devices has altered irrevocably the way we discover (app marketplaces, friend recommendations, user testimonials in social networks), buy (app stores), interact and use applications (touch and gesture-based user interfaces). It is for this reason that we have invested in Appia that provides a platform for building application marketplaces. Applications have morphed from large pieces of software with intricate functionality most of which is never used by the average user, to bite-size codes that perform a well-defined important functions extremely well. Consumers have embraced this transformation, are starting to reflect it in the applications they choose to use on their mobile devices to address their corporate needs, e.g., Evernote, Dropbox, and are now demanding to see the same characteristics and user experience from corporate applications developed by corporate IT groups and incumbent third-party application vendors. All these trends are accelerating the consumerization of the enterprise. The next cloud application leaders will come from the companies that are able to embrace and capitalize on these trends.
We also focus on the new generation of tools and applications that manage and analyze the big structured and unstructured data being generated by applications. At the top of our list is Hadoop and the associated technology ecosystem. Many of the CIOs we talk to acknowledge that they are testing Hadoop-based solutions to address the rapidly increasing data volumes that must be managed and analyzed. In the process they recognize the steep learning curve their people have to climb in order to work with Hadoop and Hadoop-based solutions, and are looking for assistance.
This was a lively panel that capped the proceedings of a great conference.
(Cross-posted @ Trident Capital Blog)