Is Google Gumming Up the Cloud Computing Movement?

Posted on May 17th, by thinkstrategies in Uncategorized. Comments Off on Is Google Gumming Up the Cloud Computing Movement?

Google’s latest service outage this past week generated a new round of attention and debate regarding the viability of the ‘cloud computing’ movement.

Although Google’s service disruption raises legitimate concerns about the reliability of today’s web-based solutions, the extent of the press coverage also demonstrated how pervasive the cloud computing movement has become.

The incident was not only reported and analyzed in the IT trade pubs, but in all the major business journals as well. This level of coverage clearly shows that SaaS and cloud computing are no longer peripheral trends, but have become popular alternatives to legacy software and traditional systems.

Another indication of this trend is the latest market forecast from Gartner, who I like to call a ‘lagging indicator’, which predicted last week that the SaaS market will equal $9.6 billion by the end of 2009, a 21.9 percent jump over 2008 revenue of $6.6 billion. Gartner forecasts that the SaaS market for the enterprise application markets will total $16 billion in 2013.

These forecasts come even as Gartner estimates that overall IT spending will decline 3.7 percent in 2009, and spending on IT hardware, including client computing (PCs), servers, storage and printing systems will drop 14.9 percent this year.

Gartner’s rationale for its SaaS predictions echo what THINKstrategies has been reporting for a long time. Yet, they are still hedging their bets when it comes to SaaS adoption in backoffice areas, such as ERP, despite the recent financial results of companies like NetSuite and Plex Systems.

Nonetheless, the latest outage at Google raises a new round of concerns among IT and business decision-makers who remain uncomfortable relying on third-parties for their day-to-day enterprise application or computing requirements.

In my view, these are legitimate concerns but should not prevent organizations of all sizes from ultimately adopting SaaS solutions and cloud computing services. McKinsey has produced an interesting comparative analysis of the total cost of ownership (TCO) or inhouse data centers versus SaaS and cloud computing alternatives.

I remain convinced that an honest self-assessment by IT and business decision-makers will lead to the realization that their data center reliability, security and performance palls in comparison to today’s leading cloud computing vendors. In addition, a thorough evaluation of their time-to-market, flexibility, TCO and ROI would also clearly favor the rapidly evolving SaaS and cloud computing alternatives.

Google reported that its outage was caused by ‘human error’, which is often at the heart of corporate data center disruptions as well. IT and business decision-makers have to determine how often and how long their organizations have to withstand these problems when their inhouse staff is to blame, and are their remedies any better than they would be if they turned to an outside vendor via SaaS or cloud computing. As I’ve stated before, this becomes a quality of support rather than a reliability of service issue.

In response to concerns regarding the quality of cloud computing support, my sources tell me that Google is rapidly hiring additional support people and significantly enhancing its enterprise support capabilities. 

While the SaaS industry has gained broad-based acceptance because of its relatively mature ‘packaged’ applications, the cloud computing sector still has a long way to go to win an equal level of adherents among mainstream organizations.

I had the privilege of participating in Cloud Slam ’09, a virtual conference, on the state of the cloud computing movement last month. Click here to see and listen to my views on the state of SaaS and cloud computing, and the steps to success in making these markets mainstream.

You can also learn more about the cloud computing market this August when I’ll be chairing CloudWorld, in conjunction with Open Source World and the Next Generation Data Center conference, in San Francisco.

This week, I’m off to Las Vegas for Interop where I’ll be attending the Enterprise Cloud Summit and chairing a panel session regarding “SaaS, PaaS, and More”. I hope to see you there.

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