The Cloud’s Tipping Point

The Cloud’s Tipping Point

I always enjoy hearing from those of you who have come to the conclusion that Cloud computing will not work, and decided you will not be developing plans to shift your business to the Cloud.

Sometimes the analysis is sound. More often than not, it omits key variables.

Perhaps you relied too much on vendor input for key variables in your analysis, or on your own in-house staff that may not necessarily have the skills, experience, or vested interest in such analysis. After all, how often do they undertake such an analysis in the first place? How well does it compare to an unbiased, independent consultant?

As I mentioned in, “Cloud Computing Economics: 40-80% Savings in the Cloud?”, your best bet is an independent analysis by an objective 3rd party.

Though instead of debating the merits of an analysis, the extent of cost savings, or other business benefits of migrating to the Cloud, I would like you to consider an another perspective.

What’s your alternative?

The inevitable answer that I usually hear is, “We’ll just continue doing what we’re doing”. That answer is quite telling. It’s clear that they have not considered Cloud computing’s tipping point.

You see, as Cloud computing continues to gain traction in the market, and Cloud interoperability improves, the value of its network effect increases, creating a bandwagon effect, and ultimately driving software providers to change their legacy business model, or into decline.

Some business leaders assume that they will be able to continue their legacy IT consumption practices unimpeded, and that their costs will not be impacted by the Cloud’s success. On the contrary, remaining on unsupported software will increase your IT costs. Finding skilled resources to support and develop on legacy software, and systems is not easy or inexpensive.

Today, the Cloud’s tipping point, may not be an issue for you unless you want the benefits your competitors are deriving from SaaS applications, as you can’t consume them any other way. No, Salesforce.com will not be sending you any shrink wrapped software by mail. You’ll have to sign up for the service like everyone else.

In any event, whether you consider the Cloud now, or later, at some point, for many software vendors, the economics of developing, shipping, supporting, maintaining, patching, and releasing upgrades to software will change. That is, those software vendors may discontinue their legacy software business model in favor of a SaaS model.

As early adopters take to the Cloud, the number of on premise customers for software vendors will decline. A small business may shift all 10 of its employees to Google Docs or Office 365, no longer buying Microsoft Office and implementing it in-house. Multiply this scenario by thousands of early adopters and it’s not hard to see the decline of the installed customer base for on premise software.

In the near term, this isn’t an issue for large software vendors as their installed base can keep revenues flowing for years even as they lose part of their large installed base. Smaller players don’t have the same advantage. Even a 10-20% hit, or one large customer, may be enough to drive them out of business or to a Cloud model, creating a domino effect.

Fast forward 3 to 5 years. Lets say 20-25% of smaller software vendors have shifted to the Cloud model.

Will this impact your business?

Even if you believe that it will not affect your business, you can see the effect will continue – as other businesses are impacted by the shift, they will have to address the issue, and make a decision whether to keep and maintain unsupported software, look for an alternative software vendor, or shift to the Cloud.

In turn, their decisions may continue to drive more business to the Cloud, more software vendors shift as their installed base erodes, more developers focus on the Cloud, and 5-8 years out it could be 25-40% of the smaller software vendors no longer shipping shrink wrapped products.

Are you impacted now?

By Ray DePena

Sorry, comments are closed for this post.

Join Our Newsletter

Receive updates each week on news, tips, events, comics and much more...

Can I Contribute To CloudTweaks?

Yes, much of our focus in 2015 will be on working with other influencers in a collaborative manner. If you're a technology influencer looking to collaborate long term with CloudTweaks – a globally recognized leader in cloud computing information – drop us an email with “tech influencer” in the subject line.

Please review the guidelines before applying.

Contributors

Cloud Infographic – Wearable Tech And Preventative Healthcare

Cloud Infographic – Wearable Tech And Preventative Healthcare

Wearable Tech And Preventative Healthcare There are so many exciting new opportunities available to utilize wearable technology in the future.  Areas such as nanotechnology disease monitoring, crowdfunding to wearable accessories are some excellent examples of the potential. Estimates vary, but appear to suggest that the market will produce between $14-50 Billion over the next few years. Included below

Ten Tips For Successful Business Intelligence Implementation

Ten Tips For Successful Business Intelligence Implementation

Ten Tips for Successful Business Intelligence Implementation The cost of Business Intelligence (BI) software goes far beyond the purchase price. Time spent researching, implementing, and maintaining your BI investment can snowball quickly and mistakes are often expensive. Your time is valuable – save it by learning from other businesses’ experiences. We’ve compiled the top ten

Knots And Cloud Service Providers

Knots And Cloud Service Providers

How Do These Two Compare? In Boy Scouts, I learned how to tie knots. The quickest knot you can tie is the slipknot. It’s very effective for connecting one thing to another via the rope you have. It was used in setting up tents, mooring boats to docks temporarily and lifting your food up into

Aggregated News

Popular News Sources

Storage Considerations for SharePoint Backups

Storage Considerations for SharePoint Backups

Storage Considerations for SharePoint Backups Wednesday, October 29, 2014 @ 9:00 am/12:00pm ET. Backup and Restore of a SharePoint environment can be a complex endeavor as the product consists of multiple components running at various tiers, each with their own backup and restore requirements. In addition, SharePoint documents are stored as Binary Large Objects (BLOBs) in

OpenDNS Deployment Leads to Twenty-Fold Decrease in Malware Infections at Hamamatsu

OpenDNS Deployment Leads to Twenty-Fold Decrease in Malware Infections at Hamamatsu

Decreases in Malware Infections at Hamamatsu OpenDNS, a leading provider of cloud-delivered security, today announced that it has enabled Hamamatsu, a Japanese manufacturer of optical sensor technologies, to virtually eliminate malware infections across its U.S. Read the source article at Finance News About Latest Posts Ray Latest posts by Ray (see all) The Cloud 300: Who

IBM and Microsoft – What Are They Doing With The Hybrid Cloud?

IBM and Microsoft – What Are They Doing With The Hybrid Cloud?

What Are They Doing With The Hybrid Cloud? “Microsoft is committed to helping enterprise customers realize the tremendous benefits of cloud computing across their own systems, partner clouds and Microsoft Azure,” said Scott Guthrie, executive vice president,Cloud and Enterprise, Microsoft. “With this … Read the source article at CNNMoney About Latest Posts Ray Latest posts by Ray (see all)