2009 Predictions – Year in Review

December 14, 2009 Appirio

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

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