Wednesday, November 11, 2015

Cloud, SaaS, PaaS, and IaaS Adoption Trends and Forecast

At this point it is clear that the term "Cloud" transcended the buzz word and is already the label of an attractive $100B+ market.
Cloud Computing represents the top enterprise IT spending in 2015, even beyond other hot growing technologies like Mobile and IoT. Not just that, budgets for Cloud offerings may even double in 2016.

And if we talk about the other two hot tech trends, it is not a surprise that about three quarters of the IoT and Mobile offerings have also a Cloud component.

Let me share with you my own direct experiences and my interpretation of some key Cloud Computing statistics over the last few years as well as the trends for the next two or three. In every case contrasting the numbers with qualitative data points and insights.

Let's then dissect the Cloud universe in the typical 3 tiers, starting from the bottom...


Infrastructure as a Service (IaaS)

In 3 years IaaS will represent: ~35% of cloud use cases (compared with a ~65% of PaaS + SaaS)  

Even if the number sounds good, it may imply a small decrease or a linear growth in
comparison with the exponential growth of SaaS.

This is due to the fact that the trend is to consume more and more turn-key comprehensive SaaS solutions, rather than building in-house or managing the third-party software/infrastructure stack with all the layers from the bottom up.

Keep in mind that even though IaaS may not grow as fast as SaaS in the next few years, it remains a booming market and has a lot of headroom ahead for growth.

The field data supporting IaaS' great prospects can be found in those cases in which software build is a must over buy or when having control of the stack is essential, for those use cases the growing trend is to invest much more on public (or Hybrid) IaaS deployments rather than in traditional IT infrastructure, as these data points show:
  • Public IaaS 5-years investment growth in next 3 years: 25% to 35% CAGR
  • Traditional on-premise infrastructure growth in the next 3 years: Under 10% CAGR
Key vendors: Amazon Web Services (clear dominant force with about half of the market), Google Compute Engine, RackSpace, Microsoft Azure, NTT Data, etc.

Key drivers: Hybrid Clouds (Across Public IaaS and private data centers), OpenStack consolidating as standard for IaaS management, Docker emerging as a low footprint alternative to virtualization for app packaging and portability.


Platform as a Service (PaaS)

As you may know this category has a gray overlapping area with IaaS, since several vendors offer IaaS and PaaS products that are closely interrelated.
The other factor here are the multiple flavors of PaaS offerings, such as iPaaS, dPaaS, mPaaS and others that not always can fit strictly in one of the categories.

In 3 years PaaS will represent ~15% of the overall cloud workloads.

PaaS is a fast and cost-effective answer to many dev, test, and prod use cases across market verticals and tiers. However its adoption rate is more accelerated in large companies, medium-to-large organizations, and SaaS/Mobile startups.

Despite its relatively slower adoption rate (compared to IaaS and SaaS) in its early days, PaaS has an excellent ROI and is picking up in momentum. It will keep growing very rapidly in the next 3 years:

PaaS will represent a ~10$B market by 2018 

Key vendors: Google's App Engine, Red Hat's OpenShift, Pivotal's CloudFoundry, Amazon's Elastic Beanstalk, etc.

Key drivers: Portability of application stacks in and out PaaS, Multi-cloud support, Integration with IaaS features, Full SDLC coverage, Specialized PaaS (mobile, data, etc.), More DevOps use cases.

Software as a Service (SaaS)

I still remember the high levels of hesitation that we experienced about 7 or 8 years ago in the early Cloud days when we were pitching our customers with "as-a-service" offerings.
Security, Data Privacy, and Compliance were back then (and in a lesser way still are today) the main customer fears and obstacles for cloud adoption.
The times have changed, cloud offerings are much more secure and accepted today and the levels of adoption have increased dramatically and will keep increasing.
  • Mid-Late 2000s: Only 30% of customers/opportunities/cases were receptive to Cloud offerings 
  • Mid 2010s: 66% to 75% of customers/opportunities/cases are usually receptive to Cloud 
These ratios are aligned with the statistics and trends below:

SaaS compared with traditional software:
  • 3 years ago: 30% to 40% of the business software bought was SaaS 
  • 3 years from now: 75% to 85% of business software to be purchased will be SaaS 
SaaS Market Numbers:
  • 3 years ago: Between $12B and $15B in revenue
  • 3 years from now: Between $35B and $45B in revenue
  • Business SaaS offerings are projecting a 20% to 25% 5-years CAGR.
Key Drivers: SSO and Federated Identities, Social Media support and enhancements, integration with Online Payment Services, transparent single cross-device UX, elements of IoT and Wearables synergy could be a huge differentiator in some specific business domains.


Cloud computing is here to stay, dramatically changing the landscape of the software industry and bringing concrete and tangible benefits for our lives.
Even newer hot trends such as IoT are heavily relaying on cloud technologies to deliver their promise.
It has been -and still is- very exciting to be part of this transformative movement that is shaping up the present and future of technology.


Sources:

  • NetworkWorld
  • Gartner
  • Eurostat
  • Accenture
  • Forrester
  • IDC
  • Goldman Sachs
  • Computer World
  • Forbes
  • Juan Noceda's direct interactions with customers, partners, and colleagues.