2009 Predictions - Year in Review

This time last year, we put pen to whiteboard in an attempt to predict what 2009 would look like for enterprise adoption of the cloud. Needless to say, 2009 was a tough year for predictions (among other things).

We had no idea how deep the economic crisis would go, what the changing political atmosphere would mean for technology, or how traditional technology vendors would react to the pending disruption of their on-premise business.

Yet we were pleasantly surprised by the accuracy of many of our predictions - some of them deliberately provocative.

When we look back at the 10 predictions, we believe 7 of them turned out to be accurate. And we'd still stand by the all the remaining 3 - just not for 2009.

So as we polish our crystal ball and attempt to glance into 2010, we wanted to revisit last year's predictions:

1. The "cloud of clouds" expands but sees traction revolve around open platforms.
YES. The trend towards "connected clouds" certainly continued throughout 2009, with important announcements between Salesforce and Twitter, between Salesforce and Google, and with Google Secure Data Connect. Even LinkedIn, the ultimate "closed cloud" demonstrated a willingness to open up. The concept of a single cloud that can power the enterprise is dead - everyone acknowledges that a cloud of clouds will be required (with the possible exception of NetSuite).

2. At best, Microsoft Azure will be a better platform for Exchange.
YES. The market certainly saw very little from Azure this year - general availability was delayed until November's PDC event in Los Angeles. But Azure increasingly looks like it might be worth the wait - we liked what we saw at PDC and definitely see market demand for an enterprise-class PaaS that enterprises can use with existing development resources.

3. Google doubles down on the enterprise, enterprises return the favor by racing to Google Apps.
YES, but the race is a marathon, not a sprint. This week's decision by the City of LA to adopt Google Apps is a watershed moment, on par with Genentech's landmark decision to adopt Google Apps last year. Google now reports 2M organizations paying for Google Apps, with 3,000 new companies signing up every day. Of course, its not trivial for any company to switch to Google Apps, so the rate of adoption has not been as quick as we'd initially expected. However, with companies like Valeo (38,000 users), Motorola (20,000 users), and Johnson Diversey (14,000 users) going Google in 2009, there's no question that large enterprise are making the move and this is only the beginning.

4. A major SaaS 1.0 company will fail.
YES. We look at the acquisition and inevitable sunsetting of Quickarrow and Open Air by Netsuite as the perfect example of how hard it is to offer a standalone, silo'd SaaS solution. The investment required is massive, and customers are demanding integrated offerings. Building on cloud platforms, such as Force.com or Google App Engine, is clearly a far more efficient and powerful way to build SaaS applications than the traditional approach of building your own multi-tenant stack.

5. A rise in serverless companies with 1000+ employees.
NO, so far. We haven't seen evidence of this trend, although clearly its just a matter of time. We'd love to be proven wrong - if you are operating a company of more than 200 people and run your business entirely on cloud platforms, let us know at cloud@appirio.com.

6. The rise and fall of the private cloud.
NO, so far. We've certainly seen the rise in hype around private clouds, and even consensus among the analysts that expectations for the benefits of building a private cloud should be tempered. But to date, the market doesn't seem to have realized that the private cloud is just a data center with a fancy name.

7. Business Intelligence (BI) becomes the next functional area to SaaSify.
NO. We were just too early on this one - in fact, one of the leading on-demand BI companies has disappeared, and we haven't seen much traction from the others. BI as a service is tough - there are huge and specialized infrastructure requirements and cloud platforms aren't yet ready to support such a data-intensive application. But the market is ripe for a reinvention of the entire BI category for the cloud-based enterprise.

8. SAP or Oracle gets into the PaaS game.
YES. SAP's Influencer Summit in November made public what we've suspected for a while - that Business ByDesign is not just a SaaS application, but SAP's attempt to launch an on-demand platform. As next year's releases of ByDesign incorporate multi-tenancy and extensibility, it has the potential to raise the bar for what we might legitimately call "PaaS."

9. Enterprises will figure out how to use social networks in the right way.
YES. Companies such as Avon, Starbucks and Comcast have all shown the impact social networks can have, even within traditional businesses. Avon and Starbucks have used social networks such as Facebook to broaden their reach and Comcast has used social networks to respond more quickly to customer issues. The common thread across these three innovators was combining the use of social networks with enterprise applications to manage and measure the impact.

10. There will be at least one $100M software product built on Force.com.
YES, although only because we predicted the potential for a $100M run rate. 2009 saw the launch of FinancialForce and our own PS Enterprise. Both products clearly address huge market opportunities, financials and services management respectively, and are already seeing traction in the market. Not only that but traditional software vendors also committed to Force.com, with both BMC and CA jumping into the game. There's little doubt that the next generation of applications, whether built by innovative startups or the establishment, will be built on cloud platforms such as Force.com.

2009 was a year when cloud computing matured as an industry and became a contender in the enterprise IT landscape. 2010 promises to be even more exciting. Watch for our 2010 predictions tomorrow!

Update: Appirio's 2010 predictions can be found here

2009 Prediction - Rise and Fall of the Private Cloud

#6 in our series of 2009 predictions

2008 Recap

2008 saw massive hype around the concept of a “private cloud,” roughly defined as a adopting the technology and practices from public cloud providers for a single company behind the firewall. “Private clouds are the future of corporate IT” declared Gartner. “Private Clouds Take Shape,” gushed InformationWeek, citing the funding of companies like Elastra and Parascale. “Get off my cloud” said eWeek, questioning the security of public cloud environments compared to private clouds.

2009 Prediction

Here’s the rub: Private clouds are just an expensive data center with a fancy name. We predict that 2009 will represent the rise and fall of this over-hyped concept. Of course, virtualization, service-oriented architectures, and open standards are all great things for every company operating a data center to consider. But all this talk about “private clouds” is a distraction from the real news: the vast majority of companies shouldn’t need to worry about operating any sort of data center anymore, cloud-like or not.

The idea that somehow companies can use “private cloud” technology to offer their employees web services similar to Google, Amazon, or salesforce.com will lead to massive disappointment. Here’s why:

• Private clouds are sub-scale: There’s a reason why most innovative cloud computing providers have their roots in powering consumer web technology—that’s where the numbers are. Very few corporate data centers will see anything close to the type of volume seen by these vendors. And volume drives cost—the world has yet to see a truly “at scale” data center.
  
• You can’t teach an old dog new tricks: What do you get when you move legacy applications as-is to a new and improved data center? Marginal improvements on your legacy applications. There’s only so much you can achieve without truly re-platforming your applications to a cloud infrastructure… you can’t teach an old dog new tricks. Now that’s not entirely fair…. You can certainly teach an old dog to be better behaved. But it’s still an old dog.
  
• On-premise does not equal secure: the biggest driver towards private clouds has been fear, uncertainty, and doubt about security. For many, it just feels more secure to have your data in a data center that you control. But is it? Unless your company spends more money and energy thinking about security than Amazon, Google, and Salesforce, the answer is probably “no.” (Read Craig Balding walk through “7 Technical Security Benefits of Cloud Computing”)
  
• There’s no secret sauce: There’s no simple set of tricks that an operator of a data center can borrow from Amazon or Google. These companies make their living operating the world’s largest data centers. They are constantly optimizing how they operate based on real-time performance feedback from millions of transactions. (check out this presentation from Jeff Barr and Peter Coffee at the Architecture and Integration Summit). Can other operators of data centers learn something from this experience? Of course. But the rate of innovation will never be the same—private data centers will always be many, many steps behind the cloud.
  

There’s also something very suspicious in all this discussion of private clouds…. private clouds are advocated mainly by companies who make their money from selling or operating data centers, and risk losing their shirts as real cloud computing drives more and more computing onto shared infrastructure. I understand why these companies are reluctant to embrace true cloud computing: Imagine being the junior partner in IBM Global Services pitching a client to develop an application on Amazon, Google, or Salesforce. Not only are you taking money out of the pocket of your colleagues in hardware and software….. you are also taking money out of the pocket of your colleagues in professional services, since integration and app development are so much easier using on-demand platforms.

That’s not to say that there’s no place for the technology behind private clouds. In certain cases where it simply isn’t an option to utilize a public cloud, this technology can have a significant impact. But those use cases are few and far between, and the benefits to be achieved are insignificant relative to the benefits of moving to a public cloud. Here’s who should be thinking about private clouds:

• Cloud Providers: This is an easy one… companies that plan on being in the business of providing cloud computing capabilities to others need to think about how to effective provide their own cloud. But we’d argue that very few companies actually need to be in this business (e.g., we believe most on-demand BI vendors should be running on public cloud infrastructure).
  
• Highly regulated industries: Government regulation will always lag behind commercial application of technology. There will inevitably be instances where nervous politicians or policy makers write up requirements that can only be met through a private cloud.
  
• Companies in the process of moving to a public cloud: Of course, no company of any significant size can move its IT infrastructure to the cloud all at once. In fact, Appirio specializes in helping companies figure out what the right first step is away from their on-premise infrastructure. For the IT infrastructure that hasn’t yet moved, it definitely makes sense to think about how to use “private cloud” technology. But that means the private cloud is a temporary stop-gap, not the “future of enterprise IT.”
  

Implications for customers.
Of course any customer with a data center should be thinking about how to use the technologies behind “private clouds” to improve their efficiency. But this should be a minor element of your long-term IT strategy. The most important thing any IT department can do in 2009 is chart out a thoughtful plan to migrate significant portions of your IT infrastructure to the public cloud. Don’t let “private clouds” be a distraction from that goal.

2009 Prediction: Google doubles down on the Enterprise

#3 in our series of 2009 predictions

2008 Recap

2008 was a fantastic year for Google's enterprise apps. They successfully made the transition from something small companies might dabble with to apps that large corporations rely on. In 2008, large corporations like Genentech and government organizations like DC government successfully made the transition to Google apps and became public advocates.

2008 was also a year of great innovation for the rest of Google's enterprise-relevant technology, with the introduction of their App Engine development platform, great new APIs like the visualization API and significant new features like adding video to Gtalk. Google also got serious about becoming part of the enterprise application ecosystem. They did this through integrations between Google Apps and Salesforce.com in April, and integration between App Engine and Force.com, late in the year.

2009 Prediction

We believe that 2008 was an inflection point in Google's adoption in the enterprise, particularly for mail and calendar. Google will double down on the enterprise in 2009 and see massive adoption. We believe this will be driven by 4 things.

Google continues to demonstrate commitment to the Enterprise
Google has publicly highlighted the enterprise as a strategic area in 2009. They have also made concrete moves to address enterprise needs, including obtaining SAS-70 certification, integrating with Enterprise class clouds like Salesforce and providing SLAs. We expect this to continue and accelerate in 2009 with expanded offline access, greater support for enterprise-class programming languages and more. Google's mission is to organize the world's information. Much of that information is generated as we all go about our daily jobs-- those who suggest that Google isn't serious about the enterprise have too narrow a view of their ambition.

Economic conditions drive evaluation of alternatives to Office/Exchange
Companies everywhere are re-evaluating their budget in the light of the stormy economy. In this environment, companies are scrutinizing all spend, particularly spending on non-strategic activities. Mail and Collaboration software, while necessary, require a disproportionate effort and cost for most IT departments. CIOs, who will be under pressure to do more with less, will be more open to evaluating alternatives to Exchange and Sharepoint. Forrester recently released a report titled "Should your email live in the cloud?" (More detail from RWW). The answer for nearly all companies was an unequivocal "YES."

Source: Forrester

Enterprise references establish Google as a viable alternative
Google adoption and endorsement by the Genentechs and DC Govts of the world are changing the way CIOs think about Google apps. They're no longer a curiosity but a viable alternative to Exchange. We've seen this shift over the course of the year in our own client base. Earlier in the year, questions were raised about about whether Google's corporate culture is really "enterprise ready." We stand by our assertion that it is the culture of traditional IT vendors that is no longer fit for the enterprise.... and predict that more and more of the world's largest companies will agree with us.

Google apps functionality leapfrogs Exchange
One of the barriers to Google apps adoption has been companies fearing that their users will have to adjust to a lower level of functionality because of the shift to Google apps. While this might've been true in the past, Google has not only closed the gap but actually provides a superior experience for core messaging. A few key advantages are large mailboxes (10s of Gigabytes per user), the ability to search all messages using Google's fantastic search capabilities, native iPhone/Blackberry access and integrated chat/video chat. And these features are available instantaneously: when Google introduced video chat, our clients started using it that same day. In an on-premise world, this would've required upgrades to each instance of the software before it was available to all users at the company.

Implications for Customers
Google apps are here to stay and are a viable, potentially superior alternative to Microsoft Office/Exchange. However, there are two important caveats. First, Google Apps, while sufficient for the needs of 80% of a company's business users, will likely not completely replace Microsoft Office, especially Excel and Powerpoint. Here at Appirio, we continue to use Office for a lot of our document creation, but then move documents to Google Apps to share, revise, and present (instead of using email and GoToMeeting).

Secondly, mail and calendar migration is non-trivial from both a technical perspective as well as organizationally. So, careful planning and a sequenced approach incorporating pilots are critical to success. We've held Google Apps "Bootcamps" to explore these issues, with speakers from companies like Genentech talking about their success (click here for a video).

What do you think?
Which of our predictions do you agree or disagree with? Please let us know by voting in our poll or commenting below.

2009 Prediction: Business Intelligence goes SaaS

#7 in our series of 2009 predictions

2008 recap

Business intelligence is an unsolved problem. At every company we’ve ever worked with, managers lack the information they need to make intelligent decisions.  Why is this, after the rise (and eventual fall) of an entire industry around business intelligence technology?  Will Cloud Computing change the sorry state of business intelligence for customers?

2008 saw a number of next-generation BI providers move their offerings from niche to mainstream.  Companies like PivotLink, LucidEra, Good Data, and Panorama announced a maturation in their offerings and important customer wins.  Even Business Objects and Cognos were able to advance their on-demand offerings from within their on-premise parents. 

But most business still lack basic access to critical information.  For most people in most companies, it takes a request to IT (and perhaps a call to your implementation parter) to do something as simple as add a field to a report.  In our eyes, this is a market ripe for disruption from cloud computing in 2009.

2009 Prediction

Despite the fact that on-demand business intelligence has been slow to take off, there are fundamental problems in business intelligence that, in our view, can only be solved through cloud computing.  We believe that the increased availability of cloud computing platforms in 2009 will make BI the next application category to reach the tipping point of on-demand adoption, fueled by data from SaaS applications. 

Why BI?

BI is a classic “bursty” application.  BI requires infrequent access to massive computing power-- a perfect application for cloud computing.

Thanks to Google, users have been trained to expect nearly instantaneous access to any piece of information.  Instead of spending hours formulating a carefully crafted query to run once, users expect to be able to navigate iteratively through their business information.  They expect to run an initial search, see what comes back, and explore from there. 

This is simply not possible with any legacy BI system: vendors brag about achieving sub-minute response time… a far cry from the sub-second response time that an interactive application requires. 

As a result, BI's impact in the enterprise has been limited... only a few power users are able to use it effectively.  The impact and value of BI would be exponentially greater if business users could search and navigate their company's data in the same way they search and navigate the information on the internet.  

Why can't in-house IT departments deliver this level of performance and usability using legacy BI systems?  In part, the issue is infrastructure.  BI infrastructure is overpriced and tremendously under-utilized.  Many BI systems sit completely idle 90% of the time, only to be hammered on well beyond capacity in the days (or hours) leading up to a management meeting or end-of-quarter analysis.

These are perfect conditions for the shared infrastructure of cloud computing. Shared computing power is the only way that companies can deliver the responsiveness their users demand without a prohibitive investment in hardware.  On-demand BI vendors, with their roots in modern web-based technologies and user interfaces are well positioned to create usable BI applications that will finally unlock the value from companies' transactional data.

Why BI from SaaS data?

We also predict that the winner in on-demand BI will emerge from an initial strength in analyzing data from SaaS business applications.  Why?  Analyzing data from SaaS applications overcomes 3 of the key barriers to adoption for on-demand BI: Security, transformation, and integration.     

Security:  Your business data are your crown jewels, and nobody wants to be the first to put that into a shared infrastructure.  That’s why we think that data generated by on-demand business applications is the likely starting point for on-demand BI…. After all, this data already lives in shared environment. 

Transformation: Query, reporting, and analysis is not the hardest part of BI—getting data into a format suitable for analysis is a far harder challenge, especially for an on-demand solution that’s trying to bring together information from behind the firewall.  This is less of an issue for BI running off SaaS applications where the data is already in the cloud. 

Integration: Most analytical applications require bringing together business data from multiple sources.  Most modern SaaS applications offer more open APIs than on-premise software.... on-demand BI has the potential to be better integrated, and therefore more valuable, when paired with a SaaS application.

Implications for customers

Of course, it will be difficult for customers to justify investing in an entirely new BI infrastructure, especially since most are still trying to justify the investment they made in their last round of on-premise BI infrastructure and 2009 looks to be a year of frozen or slashed IT budgets.

That’s why we expect to see on-demand BI enter the enterprise from the line of business, not the IT department.  Business users will be fed up by the inability of their IT department to support their basic demands for information.  If they’re already using a SaaS solution, they’ll be tempted to try an on-demand BI solution that they can get running without IT support, out of their operating budget (exactly how on-demand CRM initially penetrated the market).   

This is what we expect to see in 2009:  Low ticket, low risk, on-demand BI solutions, built on cloud platforms, with adoption driven by business analysts hungry for information. 

Our advice for enterprise IT?  Let it happen.  There isn’t yet a clear winner in on-demand BI, and you have much to gain and little to lose from these experiments.  These are not requests you’ll be able to service in 2009 anyway, and early experimentation will leave you well positioned to jump on a winning solution.  

What do you think?

Which of our predictions do you agree or disagree with? Please let us know by voting in our poll or commenting below.

2009 Predictions: Azure Disappoints

#2 in our series of 2009 predictions

2008 Recap

We’re not sure exactly what there is to recap about Microsoft Azure in 2008, other than the launch event, which certainly generated a lot of buzz. 

A closer look by many  generated more skepticism. Phil Wainewright said it best: “Whereas real cloud vendors release working services in beta on the same day they announce them, Microsoft simply announces what it’s going to do a year or two off in the future….  Ray Ozzie confessed that ‘the maturity of the things that we’ve got on them as this point in time is limited. It will be a different story a year from now. But I wouldn’t want to hold it for another year. So, we’re getting in the game.’” 

2009 Prediction

So we’re keeping our expectations in check for Azure in 2009.  CNET doesn’t expect web-based Office on Azure until 2010. There are only a handful of applications (nearly all Microsoft built) being demonstrated on Azure….the next generation of Live Meeting is supposedly up next. 

Why the slow pace? Part of the explanation is certainly the scope and ambition of the Microsoft vision.  Microsoft has a history of being late to markets that it eventually dominates, and we certainly don’t want to under-estimate the power of the resources Microsoft has at its disposal. Ray Ozzie is a visionary, and he’s charted out an ambitious course that will take decades to fully realize.   

But we think there’s more to it than that.  The last 2 years have shown us how challenging it is to play in both the cloud and client-based worlds.  We’re written about the challenges SAP has faced building new business models without disrupting their core business. Microsoft will face the same challenges.  This tension between wanting to play in the cloud without damaging its cash cows is the reason that it has taken Microsoft so long to even start talking about Azure.

Given this conflict, we don’t expect much from Azure in 2009.  Microsoft will use it as a platform for some of its own services, but will face huge go-to-market conflict in rolling these out to customers.  Microsoft’s developer community will face the same conflicts, and will be unsure how to focus their
investments.  The hundreds of companies that make their living hosting Microsoft Exchange servers have the most to lose—Exchange and Sharepoint are likely to be the first applications ported to Azure (exhibit A of the types of conflict Microsoft will encounter as they roll out Azure).

What it means for customers

The big news for customers out of Microsoft Azure is validation of the cloud computing model.  The entire IT industry is FINALLY unanimous in acknowledging that the future of enterprise computing lies in the cloud.  Microsoft, IBM, SAP, Oracle—all have now told their customers that they need to be thinking about cloud computing. 

So the real question for the enterprise is how to get started. That’s a question that we at Appirio love to help customers answer.  Unfortunately, the answer is probably NOT with Microsoft Azure.

What do you think?

Which of our predictions do you agree or disagree with? Please let us know by voting in our poll or commenting below.  And follow a rich dialog on these predictions hosted by Clint Boulton at eWeek.

2009 Prediction: Enterprises will figure out how to use social networks in the right way

Prediction #9 in our series of 2009 predictions...covered out of order due to New York Times Blog coverage.

2008 recap: In 2008, social networks exploded in popularity, but remained almost entirely a consumer phenomenon: 2008 was the year where social networking was more popular than online pornography... "In 2008, if you're not on a social networking site, you're not on the internet," wrote the Interactive Advertising Bureau.  But while 96% of Millennials / Gen Y had joined a social network by the end of 2008, only 57% of overall internet users did.  And while there were over 50,000 applications written on the Facebook platform, nearly none help people be more effective at work. 

2009 prediction:
In 2009, we predict that companies will finally figure out how to use social networks in the right way: by building up (NOT undercutting) the trust between employees and their friends. Your employees already use social networks to connect and exchange information with others in their personal life... there's no reason that this trend would stop at the office door.  In 2009, you'll see HR, marketing, and sales organizations at leading companies capture real business benefits from effective, trust-based use of the social networks of their employees:

• Find and attract great talent for your company by encouraging viral employee referrals
  
• Create a "virtual account team" of friends inside and outside your company as you approach strategic accounts
• Virally promote activities your employees, customers, and partners are excited about

Implications for customers
The underlying reason that social networks are valuable in the enterprise is simple: people trust their friends.  Messages that come through personal connections will always have a higher impact than corporate messages conveyed through traditional advertising.  This is what gives social networks such potential for viral sales, marketing, and recruiting.... and why maintaining the integrity and trust of the social network is so important.  Companies who want to use the social graph effectively need to understand 3 core principles of social networking in the enterprise:

• The world doesn't need "yet another" social network:  Social networks benefit from increasing returns to scale.  The larger the network, the richer and more valuable the connections between its members.  That's why efforts to create "behind the firewall" social networks have failed.  Even the largest companies are too small to sustain the diversity of social connections required to rival the level of interactivity of a public service like Facebook.  Companies need to acknowledge that the most valuable social networks live outside their firewall, and that making the most of the social graph requires reaching out, not
  replicating within. 
  
• Lines are blurring between work and play:  Many of us would like a clear line between our work life and our personal life....including a separation in these two social networks. But this separation isn't sustainable, and is already starting to break down.  One example: our grad school classmates initially connected on Facebook--- even though we are all now doing business together, we still use Facebook to stay in touch.  Functionality wise, there's no reason not to (Facebook's interaction is just as effective with work friends).  And in any case, services like FriendFeed and Ping.fm make the notion of a separate, disconnected personal social network quaint.  What does this mean?  Companies need to get used to doing business on Facebook, and seeing personal information on LinkedIn.  Employees need to get better using the capabilities these services offer to show different things to different friends.  But at the end of the day, people are people, whether at work or at play-- there's no such thing as a purely social network.       
  
• Employees own their social network, not their employers:  Every marketing organization salivates over the prospect of privileged access to Facebook's 120 M users. But effective use of social networks requires an understanding that employees own their social networks, and will only allow their employer access if there's a clear value proposition to them AND their friends. The New York Times wrote up Appirio's Jobs4myFriends Facebook application, calling out the risks of inappropriately using an employee's social network. We couldn't agree more: that's why recruiting is such a great use case for an enterprise Facebook app--- our application puts control in the hands of employees, allowing them to refer friends they’d love to work with. YOU choose whether or not to refer a friend for a job, and your company will never see anything about your friends that isn’t public. Establishing this trust is critical to bringing social networks into the enterprise.

Companies need help applying these principles to their social networking efforts, and we will certainly see a lot of missteps and false starts.  But the trend is clear, and we are confident that 2009 will be the year that companies start to see major business benefits from trust-based use of the social graph. 

What do you think?

Which of our predictions do you agree or disagree with? Please let us know by voting in our poll or commenting below.

"Cloud of Clouds" - the first in a series on our 2009 predictions.

2008 Recap

In 2008, we saw the early seeds of a "cloud of clouds" emerging. It started in April with Salesforce and Google announcing integration between Google Apps and Salesforce to bridge the gap between Google's productivity applications and Salesforce. Later in the year, at Dreamforce, Salesforce expanded the idea of a "cloud of clouds" by announcing integrations with Facebook (for social graph information) and with Amazon (for raw computing infrastructure). Salesforce ended the year with a bang, by announcing Force.com for Google App Engine. In a period of 12 months, Salesforce laid the seeds of a "cloud of clouds" bringing together the strengths of multiple, complementary, on-demand platforms to create a "virtual platform" for the industry.

2009 prediction

The "cloud of clouds" expands around connected platforms. We'll see increasing investment from Microsoft, IBM, and other traditional software players in new but siloed cloud platforms. At the same time, proponents of a more open approach like Amazon, Facebook, Google, Salesforce will push more and deeper “cloud connections” like they did this year - creating a more heated debate between the value of siloed versus federated platforms.

What this means for customers

Customers will face a choice in 2009 about where to focus their investment in cloud computing. Companies like Microsoft and IBM are building cloud offerings that recreate the old software paradigm using new infrastructure (both offerings warrant a prediction of their own, coming soon). This will offer customers some incremental cost-savings and slightly more flexibility, but does not enable anything fundamentally new.

What is unique about the "cloud of clouds" is the ability to connect realms of software that have never been connected in the past, e.g., business applications, collaboration applications and social applications. This enables increases in both efficiency (through improved productivity) and effectiveness (through insight and new connections between information). A few examples:

• Allow communication and collaboration in the context of business information: On-demand solutions offer the potential to finally bridge the gap between the tools that businesses need to run and the tools that people use to get things done. Imagine an account team communicating and collaborating in the context of their live customer data. That's the power of bringing together Salesforce and Google.

• Bring social graph information into sales and recruiting: Imagine a sales person seeing how they are connected to a prospect before they send out a critical email. This would result in a far superior interaction and most likely a higher close rate. Imagine an employee using Facebook to identify the best candidates for their company's open job positions. These employee referrals are likely to be of a significantly higher quality than typical applicants. That's the power of bringing together Salesforce and Facebook.
  

So, the choice for companies is clear. Closed clouds offer the opportunity for more of the same done slightly better, while the Salesforce/Google/Facebook/Amazon "cloud of clouds" offers the opportunity for order of magnitude improvements in core business processes!

What do you think?

Which of our predictions do you agree or disagree with? Please let us know by voting in our poll or commenting below.