Appirio’s Consultants Weigh In: Predictions for Twenty-Eleven

by Mark Koenig and Ryan Nichols

Last week we published a review of our 2010 predictions. All things considered we did pretty well, with six of ten on target, three of ten moving in the right direction, and one still on the horizon. Still, as we read through the avalanche of year-end predictions and posturing by the pundits, we found ourselves asking how we could avoid being “just another year-end blog post.” So once again, we decided to canvas our team of over 250 cloud practitioners, on the ground as we speak, accelerating the adoption of cloud computing at hundreds of real-life customers.

This time, we compiled 30 IT analyst predictions about cloud computing in 2011 from leading IT industry analysts and industry leaders and loaded them into Google Moderator, abridging the predictions to conform to Moderator’s 255-character limit, and veiling the identity of the prognosticator. Then we invited all of Appirio to vote the ideas up or down. Our colleagues cast 1388 votes over a one-week period.

Here’s how the results played out (with sources identified). And, since we are compiling the results - and because we can’t resist - we took the liberty of providing some color commentary as well.

Prediction 1 (87% Up / 13% Down): “Vendors that provide cloud integration tools and professional services will be key acquisition targets because they represent a critical component in pulling the various cloud piece-parts together.” (Source: THINKStrategies)

Commentary: Not surprisingly, Appirians voted up the one prediction that focuses on our sweet spot: cloud-to-cloud integration. We too think this is going to be a big focus in 2011. Gartner predicts that this type of “cloud brokerage” represents the single largest opportunity in cloud computing. Some companies in this space will become acquisition targets-- others like us are hoping to emerge as the next-generation IBM (with all the hardware in the cloud, of course). Our own offering in the space, CloudWorks, was introduced in September of 2010, and is already in use by industry leaders in the telecommunications and manufacturing industries. Oh - and used by Appirio too - ask any one of our team members to show it to you.

Prediction 2 (81% Up / 19% Down): “2011 will be the year when industry giants from across the spectrum -- including major financial institutions, pharmaceuticals and retailers -- will migrate major internal and external IT systems to the cloud.” (Source: CRN)

Commentary: Some would argue that the reason this prediction ranks so highly is that Appirians are already convinced that cloud has a seat at the table alongside other mainstream technologies. But there is a good reason - we are the ones who have been doing the work at these industry giants - household names such as the City of Los Angeles, DeVry, Dolby, Dunkin’ Brands, Motorola, Qualcomm and Starbucks - and we are the ones talking to them about where they want to go next in the cloud.

Prediction 3 (77% Up / 23% Down): “The Cloud Computing market will grow more rapidly than analyst firms forecast as organizations move from asking ‘what is cloud and why is it important?’ to ‘where and how can I capitalize on the cloud today!?!’” (Source: THINKStrategies)

Commentary: There is no question that the tenor and the content of the cloud conversation has changed. This prediction sums up the shift. Now that cloud has moved from the kid’s table to the grown-up’s table, executives are actively looking for opportunities to bring it into the conversation. This is especially true among companies such as our customers who have already started on the path of adopting cloud applications. We recently conducted a survey of 150+ mid-sized companies that have adopted one or more cloud applications and found that this group plans to more than double their cloud footprint within the next three years (full results here).

Prediction 4 (73% Up / 27% Down): “Mobile devices become the primary means of accessing enterprise cloud applications, just as they’ve become the primary means of accessing the internet. This has huge implications for how applications are built and how business gets done.” (Source: CRN/Appirio)

Commentary: Aw shucks. This is the one prediction that we did end up publishing this year, when asked by CRN Magazine for a contribution, and we’re pleased as punch to see it ranked so highly. Modesty aside, mobility and the cloud is one of the most high-demand areas of focus for our consulting teams. This combination has the power to change businesses and entire industries, as we’ve found in our work with RehabCare, a leading provider of rehabilitation services who is arming their 18,000 therapists with iPads!

Prediction 5 (70% Up / 30% Down): “Social networking will become a required component of enterprise applications, driven by the success of salesforce.com’s Chatter.” (Source: THINKStrategies)

Commentary: There’s no doubt that enterprise applications need to get more “social”-- with 500M people on Facebook, our expectations of how we communicate and collaborate are completely different than they used to be. But bringing social features to the enterprise is harder than it looks (much more than just cloning Facebook), and there’s no reason to re-invent the social feature-set application by application. That makes 2011 the year of the social platform - that’s exactly why Salesforce is re-architecting their platform to enable Chatter for custom applications built on Force.com. This is a big idea, one where they’re sure to have plenty of competition!

Prediction 6 (69% Up / 31% Down): “2011 will see an unprecedented escalation of the cloud wars, with vendors on all sides pushing their proprietary cloud stacks. Channel partners should be on guard to avoid lock-in...” (Source: CRN)

Commentary: Unless you want to be relegated to the lowest common denominator of cloud computing, you’re going to have to manage some degree of lock-in... that’s always been a reality of adopting innovative new technology. The rate of innovation in cloud computing is so great that we’ve yet to see true portability standards emerge. That being said, we’ve seen more and more adoption of open standards by “proprietary” cloud stacks to overcome this concern - Salesforce’s embrace of Java (through VMforce) and Ruby (through Heroku) is a case in point.

Prediction 7 (69% Up / 31% Down): “Corporate decision makers shift their focus from reliability, security and integration concerns to strategic and tactical governance issues: planning, selection, deployment, monitoring and evaluation, optimization and monetization of cloud initiatives.” (Source: THINKStrategies)

Commentary: Just as fear of flying is most prevalent in those who have never flown, fear about cloud security is most prevalent among those who have never used a cloud solution. Companies who actually use cloud solutions named security concerns the #1 misconception about cloud computing. Once you get over those concerns and take your first, second, and third steps towards the cloud, your main concern quickly becomes how you’re going to manage and govern this once-in-a-generation shift in IT architecture.

Prediction 8 (65% Up / 35% Down): “Rate of cloud company failures and M&A activities will escalate. Many startups are unable to keep pace with rising customer expectations and intensifying competition. Established players accelerate their development efforts via acquisitions.” (Source: THINKStrategies)

Commentary: Consolidation is inevitable among the thousands of self-described “cloud” solution vendors. Vendors who have “cloud-washed” their hosted or on-premise offerings are going to have a tough time competing with the superior economics of multi-tenancy in 2011, as are sub-scale vendors who aren’t taking advantage of IaaS and PaaS to level the playing field. That being said, we’re a little disappointed in our team for voting this one into the top ten. It seems to be a perennial and generic - i.e.: not very interesting - prediction (compare it to the next prediction on the list).

What do you think of these predictions? Are these ranked in the right order? Did we leave anything out? We’d love to hear your thoughts in the comments below. Or better yet, use your Google account to log-in to our Google Moderator series for this blog post and revise them all - and keep on voting!

2010 Cloud Predictions - Year in Review

Mark Koenig and Ryan Nichols

As 2011 gets underway, we wanted to look back at what will certainly be remembered as a big year for cloud computing-- the year that the main question about the cloud became not "if", but "when" and "how."

One year ago, we made 10 predictions about the cloud.... now its time to go back and grade our performance. At the end of the day, we'd argue that 6 of our 10 predictions were accurate. Three more fell into the "sorta" category-- where things moved in the right direction, but not strongly enough for us to declare victory. And we'd still stand behind #10... just not this year.

Here's the blow by blow for each of our 10 predictions:

Prediction #1: Cloud developer community grows faster than open-source. We predicted that "Today's vendor-specific developer communities will be complemented by a community dedicated to the general discipline of building applications on the cloud, disrupting existing on-premise developer communities. The combination will launch a new generation of 'cloud developers.'"

The Verdict? SORTA. There's no doubt that 2010 was a big year for cloud communities: Microsoft is building a healthy developer community around Azure, and Salesforce is doing its best to bring the Java and Ruby developer communities to the cloud. Appirio is doing its part as well, introducing a beta version of the first cross-cloud developer community this month at Dreamforce for developers interested in solving and discussing problems that span cloud platforms. But this growth in cloud communities was accompanied by some significant growth in open source communities as well.... often driven by cloud providers! For example, look at how Google has used open source to accelerate the growth of developer communities around Android, Chrome, and App Engine.

Prediction #2: Cloud standards won't (and shouldn't) happen. We predicted that "the pace of innovation is so rapid in the cloud that the emergence of truly open cloud standards won't yet be possible, except at the lowest levels of infrastructure. Traditional vendors will attempt to muddy the waters across layers and claim the 'standards high ground' with efforts like the Open Cloud Manifesto."

The Verdict? YES. There has been surprisingly little rhetoric - and even less action - around the need for cloud standards in the market... perhaps the innovation curve in cloud computing is still too steep to allow for true standards. That won't always be the case-- Here's Vivek Kundra, the federal government's CTO, predicting that the federal government's move to the cloud will accelerate the emergence of cloud standards in certain areas, like security.

Prediction #3: Cloud providers tackle lock-in. Since platform lock-in is one of the major concerns keeping CIOs from building enterprise applications on PaaS, we predicted "major initiatives from cloud providers to overcome this objection, either revolutionary (e.g., Force.com supporting other languages) or evolutionary (e.g., application migration frameworks or platform 'porting' toolkits.)"

The Verdict? YES. With the already-noted investments of Force.com expanding to support Java and now Ruby, the concern over lock-in is getting a lot of attention by PaaS providers.

Prediction #4: Cloud integration will get an enterprise poster-child. We predicted that "Boomi or Cast Iron will land a major enterprise customer in 2010 that replaces their on-premise integration technology with a cloud-based alternative."

The Verdict? SORTA. We foresaw that there would be big news for these two, but it turned out that it was on the acquisition and not the customer front: Boomi and Cast Iron are now divisions of Dell and IBM, respectively. And as part of those venerable IT names, we expect that these solutions will become complementary components of their existing on-premise offerings, rather than cloud-centric replacements. Cloud-to-cloud "brokerage," on the other hand, is now being called by Gartner the "largest revenue opportunity in cloud computing," and even the mainstream media has taken notice of what's sure to be a big trend in 2011.

Prediction #5: Enterprise apps get Googled. We predicted that "Google's investments in its cloud platform will transform Google Apps from a simple Exchange/Sharepoint replacement into a legitimate front end for enterprise applications (e.g., Google Web Toolkit, Secure Data Connector, and the Google Gadget Framework.)"

The Verdict? YES. Google continues to make significant investment in Apps this year to make them more appealing to enterprise users. In addition to a myriad of innovative new application features (e.g., Priority Inbox), Google launched its apps marketplace to tap the power of the ecosystem building on Google Apps as a platform. Google's new extension points make it much more than just a collaboration solution-- check out this demonstration of what we've been able to do at Appirio by making enterprise applications available through Google Apps.

Prediction #6: Enterprise collaboration is a feature, not a business. We predicted that "Salesforce Chatter and Google Wave will show the value of real-time collaboration that is seamlessly integrated with business applications. Standalone enterprise collaboration offerings will have difficulty competing."

The Verdict? YES. Take Google Wave for example. While it may have disappeared as originally envisioned, Google has already incorporated some of the advances in collaboration technology that came out of that effort into Google Apps. And this year's advances in the Salesforce Chatter platform, coupled with the announcement of Chatter Free highlights even more how tough it's going to be for vendors to build a standalone business in enterprise collaboration.

Prediction #7: Microsoft lets Azure cannibalize a global account. After Microsoft's big push around Azure at its Professional Developers Conference, we predicted that "Azure will cannibalize Microsoft's on-premise footprint at a global account."

The Verdict? SORTA. Of course, 2010 as the year that Microsoft went "all in" when it came to cloud computing, but to our knowledge, Microsoft has yet to let Azure cannibalize a global account. That said, it is interesting to see how aggressive they're being with the beast formally known as BPOS. They are practically giving it away and over the last few months have been waging a huge FUD campaign against Google Apps to try and keep them out of Microsoft's enterprise accounts.

Prediction #8: Cloud computing consolidation. With 2000+ providers, we predicted that "the cloud ecosystem is ripe for consolidation. Salesforce.com and Google are likely to continue with point acquisitions, but they won't be alone. Having missed the first wave of innovation in cloud computing (and lacking any other on-premise technology to acquire) we expect Oracle to buy into the industry that Larry Ellison has dismissed as 'water vapor.' Maybe they'll finally snap up NetSuite."

The Verdict? YES (except for the NetSuite bit). We've noted already the acquisitions of cloud players like Boomi, Cast Iron, and Heroku. There were others - most notably in the storage arena: HP's acquisition of storage player 3Par, and Dell's recent agreement to buy Compellant. As for Oracle, after completing their purchase of Sun, they put all that hardware to good use and announced "cloud in a box."

Prediction #9: Global Systems Integrators will do nothing more than cloud marketing. We predicted that "The most innovative thing we expect from Accenture next year is a replacement for its Tiger Woods ad campaign."

The Verdict? YES. With tens of thousands of SAP consultants, Accenture has still only certified about 65 consultants on Salesforce, and while they are certainly ramping up their cloud marketing efforts, we haven't seen much that's truly "innovative" from them. The exception being their recent video with some pretty smart kids explaining cloud computing. Those Accenture consultants are looking younger and younger every day! =)

Prediction #10: The real innovation will be in the business of cloud computing, not the technology. We predicted that "Cloud providers will become dramatically easier to do business with (e.g., Amazon Spot Markets) and new business models will emerge to make the cloud more consumable (e.g., cloud insurance providers, cloud security auditors, cloud brokerages.)"

The Verdict? NO, at least not yet. Cloud computing technological innovation continues at a blistering pace. Meanwhile, with the exception of the nascent cloud services broker segment, the other cloud related businesses we mentioned last year remain closer to the drawing-board than to the board room. What is clear, however, is that cloud computing can no longer be considered an emerging component of the IT landscape, thus, we expect to see these new business models in the very near future.