The Future of "The Cloud" – A Podcast from Ariba Live (Part 2)

In the first post in this series examining industry analyst perspectives on the cloud at Ariba's recent event, I shared viewpoints from AMR's Mickey North Rizza and Hackett's Chris Sawchuck. In the second installment, I thought it would be worth drilling into how another analyst with more of an IT focus (and less on procurement) sees the cloud. Accordingly, Bruce Guptill, who also sat on the panel at Ariba's event, notes that his firm has surveyed over 7,000 executives in recent years and "what it is that they want to do with cloud IT, whether it's SaaS or IaaS, platform as a service (PaaS) or whatever ... in every single case so far, they're using it to add to what they have. It's filling in the gaps." This statement is telling for a number of reasons, not the least of which is that it shows the definition of the cloud, at least as some analysts look at it, really is just the same as what we called SaaS and other hosted platforms, software and related solutions before.

In other words, if you define the cloud as Guptill does, the phrase represents a single piece of jargon that encapsulates lots of other jargon (e.g., SaaS) to capture the concept of remotely hosted and delivered capabilities. Regardless of what the heck the cloud actually is -- and how much bigger it is than just SaaS -- Guptill says that by the end of 2015, his firm's research suggests that "more than 50 percent of new IT spending will be in the cloud for the first time ... But, that means that about 50 percent, or a little less than half, is still going to be on-premise, so that stuff is not going away."

I also believe that the world of customized installed software (even non-ERP delivered customized software) is not going away, even in a world where 50% of spending is going towards off-premise solutions. Within the Global 2000, at least some customized solutions in sourcing, spend analysis, contract management, MDM and other areas will certainly remain behind the firewall depending on organizational requirements and the level of bespoke technical and integration tailoring required. In my view, the cloud, or whatever you want to call it, will only become ubiquitous -- i.e., the rule versus an option -- when it delivers better system-to-system and third-party content and services integration than alternative models. And my guess is that we're still 5-10 years away from that.

Jason Busch

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