Bi101 Blog … on cloud computing and SaaS, by Business Intelligence 101

Cloud Computing Continues to Grow in the Enterprise

Recently Gartner announced that worldwide software-as-a-service (SaaS) revenue is forecast to reach $7.5 billion in 2009, a 17.7 percent increase from 2008 revenue of $6.4 billion.

The cloud computing market continues to evolve, with more vendors creating cloud computing offerings and more companies becoming comfortable moving to the cloud.

Bi101 deploys cloud apps to both the enterprise and small business. From our experience, two computing areas are driving both groups to the cloud: content, communications and collaboration (CCC) and customer relationship management (CRM). Garner confirms that these two areas are driving the transition to cloud computing within the enterprise:

Worldwide Software Revenue for SaaS Delivery Within the Enterprise Application Software Markets (Millions of Dollars)

2009 2008
Content, Communications and Collaboration (CCC) 2,573 2,143
Office Suites 68 56
Digital Content Creation (DCC) 62 44
Customer Relationship Management (CRM) 2,281 1,872
Enterprise Resource Planning (ERP) 1,239 1,176
Supply Chain Management (SCM) 826 710
Other Application Software 472 387
Total Enterprise Software 7,521 6,388

Source: Gartner (November 2009)

What’s interesting about this cloud computing evolution is a single SaaS offering’s ability to provide the same impact to both the enterprise and small business. Rarely have we seen this in software markets of the past; the enterprise and SMBs have typically required vastly different offerings, in terms of complexity and scale. And it was rare that a single vendor could deliver both. Now, the same version of Google’s Postini can serve 15 users or 1,000 users equally well.

Cloud Computing Value Differences

The drivers of the shift to the cloud are different though. From what we’ve experienced, enterprises are switching to offerings like Google’s Postini for email security and encryption and Google Apps for collaboration to lower IT costs. Enterprises typically have the sophistication and resources to have in-house solutions already in place. Cloud apps simply deliver the same functionality at lower costs, allowing companies to move from expensive legacy solutions like Microsoft’s Sharepoint to SaaS offerings.

For smaller businesses, the main drivers of cloud applications are increased productivity, security and reliability. Small companies typically don’t have a sophisticated WAN or LAN already in place to provide remote access for collaboration and data sharing, so cloud computing expands their computing power at a very reasonable price.

Gartner predicts that SaaS revenue will continue to increase in the enterprise application markets through 2013. It will be interesting to compare these growth rates to the SMB market growth rates, and to see which segment provides a greater overall impact to the economy.

My bet now is that cloud computing will have a greater economic impact in the SMB market, allowing small companies to dramatically increase productivity to contribute more jobs to the economy.

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2 thoughts on “Cloud Computing Continues to Grow in the Enterprise

  1. Hi Jim,
    Thanks for the great article on Cloud Computing, especially as it relates to how small businesses will be affected. SMB businesses definitely have a huge impact on the economy. Readers may want to check out Microsoft’s website at http://www.microsoft.com/cloud/ to find out about more about cloud computing.

    Deidra
    The Microsoft SMB Outreach Team
    v-dejow@microsoft.com

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