Friday, March 29, 2013

Which Cloud Model is the Next “BIG THING?!"

IBM's purchase of Cast Iron resulted in another new integration product in the market by IBM, called IBM Cast Iron. I find this product interesting and started working with the technology. Cast Iron provides an approach to connecting to Public Cloud, Private Cloud and On Premise applications. Recently, a colleague and I presented on this topic at an IBM conference about Cast  and Cloud Computing.

It didn't take me long to understand that the market is buzzing with the term Cloud. It seems everyone wants a piece of it - IBM, Google, Amazon, Salesforce and many other organizations. Naturally, every industry implements its own model and tries to become a market player in this. I started my journey with Cloud recently. Though there are many confusing terms, let’s talk about some business model that Cloud brings us:
a. Software as a Service – SaaS
b. Infrastructure as a Service – IaaS
c. Platform as a Service – PaaS
d. Business Process as a Service – BpaaS

I thought it would be interesting to see which Cloud model is presently more successful, attracts more market and investors and will maintain the trend in future and thereby become the next big thing in market in next decade.

According to market predictions, I found that cloud computing is expected to cross $121 billion by 2015. SaaS holds currently 73% of markets revenues; this is the largest segment of cloud computing services market. IBM is one of the global leaders in SaaS. I have gone through numerous surveys and market research and it is easy to deduce that SaaS is by far the most successful and will remain so for many reasons.
  1. Firstly, its price policy is one of the major factors which has made it very popular and unbeatable. This provides better perks for small business and small scale start up companies, allowing them to avoid the high expenses of purchasing and maintaining software. Any extra hardware for setting up the business is dispensable, makes it more cost effective.
  2. Secondly, the ability to figure out web traffic in one’s internet based business through different web services such as Google analytics or Google AdWords provided by SaaS makes it very effective to track customer preferences and user behavior and thereby setting the business in the right track.
  3. Thirdly, the availability of personalization and customization of application makes it very popular.
Here I should mention that all the above points make SaaS a very cost efficient and practical application for startup companies and small businesses which is one of the most important reasons for the growing popularity of SaaS. To take a deeper look, let’s compare the small business establishment trend and the rising SaaS popularity. An infographic by Intuit explores the costs of starting a new small business in the United States compared to other markets around the world.

The graphic shows that starting a business in the US is relatively easy compared to the largest markets in Asia and a few places in Europe At the same time, user survey analysis conducted by Gartner and others has already discerned that North America is the largest consumer of on demand solutions. This region shows the highest SaaS deployments in expense management, financials, and email and office suites.

Now let’s consider Asia pacific , between 2011 and 2012 we see , SaaS revenue for this region has hiked by approximately $200 million. Asia Pacific includes markets in Australia, New Zealand, Hong Kong, Singapore, South Korea and Taiwan, and emerging markets, including China, India, Malaysia, Thailand, Indonesia, Vietnam and the Philippines. Among them India and China are the leading users of SaaS financial applications. Now if we go back to the infographic by Intuit we can clearly see that the next best countries for starting small business are India and China. This shows a direct correlation between the SaaS usage and their market in regions with booming small business.

It seems the popularity of SaaS will continue in North America especially when the President’s 2013 Budget Bill has given immense importance on supporting small business. The Budget will provide $16 billion for Small Business Administration and thereby expanding small business and in turn generate jobs. Thus SaaS seems to be the next big thing which is here to stay in USA considering its popularity in the small business sector.

Looking at the direct correlation that we observed between the booming small scale and start up businesses in the world market and the growing popularity of SaaS among them, it is easy to conclude that the SaaS Cloud application is definitely the next Big Thing.

Next month, I will be attending IBM Impact in Las Vegas. To learn more about Prolifics' solutions and what we have planned for Impact, visit our conference page.

Note: Market data was referred from Gartner, Intuit and various sources.


Arup Datta is a Solution Architect and Integration Specialist at Prolifics and an IBM Champion for WebSphere. Arup has expertise in providing end-to-end solutions leveraging IBM technology across several industry verticals, including Finance, Banking, Retail and Insurance.