Tim Minahan, chief marketing officer at spend management Software as a Service (SaaS) provider Ariba, talks about the rosy future of cloud computing, the factors driving the shift towards the cloud and what the future might look like as more and more capabilities are at our fingertips.
Cloud, and SaaS in particular, took off due to the recession and lack of investment capital. Why won't IT buying shift back?
Tim Minahan: Whether you are talking to CIOs or CFOs, the general sentiment seems to be: "Hey, the economy was bad, we took a lot of costs out, we took a lot of infrastructure out. Unfortunately, we took a lot of people out, and even though there are green shoots here and there and signs of a recovery, we don't expect to bring all that back."
I think, fundamentally, we're seeing a shift in how companies are consuming and using technology. Just look at overall macro trends: spending on hardware is down, spending on outsourcing and services is up. Spending on cloud-based and SaaS solutions are up, even while overall enterprise application investment is flat or down.
Aside from the economy potentially acting as a catalyst for rapid adoption, what else drives this shift?
Minahan: A couple things have happened. Concerns about security, integration and scalability have been addressed as far as the level of investment that SaaS providers can deliver.
In addition, CIOs consider agility more important than cost -- namely the ability to scale up, whether it's processing power or workflow functionality, and scale that back down should they need to. Should the economy go into a "W" or double dip, they don't want to get caught flat-footed with unnecessary infrastructure, resources or costs on their balance sheets.
It seems like there's a fundamental attitudinal shift going on -- is purchasing services now a better option than doing it yourself?
Minahan: Let's look at the short history of cloud computing. First it was about sharing processing power. Then along came SaaS, which was the first venue from the application delivery standpoint. Let's take the applications that use hardware and need people to manage them and move them to the cloud.
The third thing we're seeing, and this is where I think it's going, is this "business process utility" or "business service cloud," where moving the technology, the application or the workflow to the cloud is point number one.
It's the old saw about how no one has a generator in their backyard anymore. They tap into the grid or the utility and then layer other services on it: phone, cable, what have you. The same thing is happening here. There's the technology component, and then there's the service component around it -- consultants, expertise, and delivery via the cloud -- as a subscription service. Instead of folks chasing labor arbitrage around the world to outsource their business processes, they're going to leverage technology that is infinitely more scalable and controllable than the labor arbitrage chase.
What gets me excited is the whole concept of this business service cloud that really provides the opportunity for entirely new business models. Forget about the technology provider or the service provider themselves; imagine new tools that can build on top of this. No longer do you have to go out and buy the building, buy the infrastructure, buy the technology. You literally say, "I like the technology, I have a domain expertise, (or a unique intelligence, or a unique capability in a particular area) -- I can get my infrastructure from the cloud."
So do we all end up as our own business islands? Do we all end up working from Starbucks, doing business with each other?
Minahan: I think that's the utopia, right?
Carl Brooks is the Technology Writer at SearchCloudComputing.com. Contact him at firstname.lastname@example.org.