Adoption of the Cloud

There is an interesting article over at Infoworld talking about the dangers of cloud computing. It is an intriguing read about how cloud computing infrastructure is not secure enough for the Enterprise - but more secure than existing mid-size enterprises probably have in place.

The premise is that cloud vendors don't put as much investment and resources into security as do large Enterprises - but more than small companies. This might well be true. Ephraim Schwartz, the author of the piece, goes on to talk about the what applications truly belong in the cloud, and which don't. Non-mission critical applications belong within the cloud, and mission-critical applications do not.

I tend to agree. However, there is another classification of applications that will not readily map to the cloud - ones that support business processes that differentiate an organization.

Companies gain competitive advantage in the marketplace through many factors. I would argue that many companies today have only a small number of factors to play with - Service, Quality, Price, and Availability. The way they deliver these four factors is their competitive advantage. This competitive advantage is built into their internal business processes, culture and approach to the market. All of which are supported by technology.

The way a company uses technology to create business advantage, link internal processes, communicate, share information and support their business - is the competitive differentiator most companies have.

Many business critical applications will not move to the Cloud - not because of a concern about security - but because of it's inability to enable differentiation. Based on some of these assumptions I believe that we can map out, to some level of accuracy, the types of applications that different businesses will adopt.








Large Enterprise - Early adopters of Transactional Service, Moderate Adopters of Infrastructure (for non-critical applications), and late adopters of SaaS applications.

Small to Mid Size Enterprises - These folk will also be early adopters of Transactional services, and medium to early adopters of Infrastructure. They will view the cost savings related to using infrastructure services as a competitive advantage. They will also adopt SaaS applications, but at a slower rate - and for specific types of applications that are either commodities, non-critical or require a level of B2B collaboration. For instance Sales Force Automation, Supply Chain Demand Planning and Business Process Hubs.

Small to Mid Size Businesses - Early adopters of Applications (SaaS) due to it's cost benefit, pricing flexibility and low up-front cost structure. They will also take advantage of Cloud Infrastructure capabilities - but only as they are wrapped with business friendly applications. Don't look for this group to directly write web services that take advantage of Amazon S3, they will wait for the application they can install on their Windows XP Server. Low adopters of Transactional services - due to the IT requirements around the data integration.

Market Sizing the Computing Cloud

When looking at the Computing Cloud from a market perspective a number of very obvious questions start to arise. How big is the computing cloud? How many companies are in the cloud. How much revenue is actually being generated by the Computing Cloud, who is actually buying Cloud services and most importantly what is the Growth and opportunity within the Computing Cloud?

My gut tells me that the Computing Cloud very well might be another disruptive technology. A game changer that transforms how applications and services are delivered to the market. But good companies don't make decisions based on a gut feels, they make them based on business models that promise a strong return on investment.

Many companies are looking at the Computing Cloud as a way of reducing costs and delivering core services to market faster. However some companies are looking at the Computing Cloud as a new market itself. Companies like Google, Microsoft, Amazon, eBay and SaleForce.com are already in the market. Others like RightScale, who recently raised $4.5M in financing, are just now entering. How do these companies figure out what the Market opportunity is?

I have started to scan the web to try and see how much information is actually available on the topic so far. The results are pretty slim. Gartner, Forrester and the like might have some market data, but nothing that showed up on any of the public sites.

So far I have been able to find a few data points on Cloud Computing. There is a great site for registering all of the APIs available for Cloud Computing - programmableweb.com. The site not only lists all of the APIs available (755 as of this writing), but also lists the mashups that use these APIs. They also track the most used APIs, by category and vendor, by all of the Mashups. I took a couple of snapshots of the API usage and plotted it's 1 month growth, by category.

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This chart tells us a few things. First off the most used APIs for mashups are mapping. This does make sense, as many web sites are now embedding maps and context sensitive location information. All one has to do is look at the proliferation of map information within Realty web sites to see this phenomena.

Second we can see that the second tier of mashups are using APIs for Photos, Shopping, Video and Search. These are all consumer related APIs, not enterprise related. Part of this is related to the nature of mashups and the source of our data. We are not likely to see corporate activity and usage patterns within this data set. However it is interesting to note that the sum of usage for Storage, Hosting, Identity, Office and Database is less than 1/3 of the total usage for Video and only 1/20th of Mapping.

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The next chart shows us the number of mashups added during the period by Category. Again this shows us that Mapping is by far the leader. Widgets and Search also added 3 new mashups.

Summary
So what does this tell us? First off we have to realize that the data set is limited, and comes from a site very focused on mashups and the usage of APIs by those mashups. Even within that context it is obvious that Mapping is the big winner in the early use of Cloud Computing. This does make sense. There are a tremendous number of web-sites that can immediately benefit from embedding location sensitive maps directly onto their site. With the publication of easy to use map tools from companies like Google and Microsoft it is inevitable that sites would start to take advantage of them.

This trend should continue, and even accelerate. How long until every corporate web-site has an embedded Google map on their Corporate Location Page? Who is going to write their own video or photo management application when they can just embed that service onto their web site from a site like Flickr or YouTube.

The transition is now in full swing. Base services for mapping, photo management, video, advertising and other web-based services are becoming commodity applications delivered from a core set of providers. It will be left up to the rest of us to figure out how to use these services in unique and interesting ways.