The cloud computing race in 2020 will have a definite multi-cloud spin. Here’s a look at how the cloud leaders stack up, the hybrid market, and the SaaS players that run your company as well as their latest strategic moves.
Cloud computing in 2020 is more mature, going multi-cloud, and likely to become more focused on vertical and a sales ground war as the leading vendors battle for market share.
Picking the top cloud services provider isn’t easy given that the answer — much like enterprise software and IT in general — boils down to “it depends.” Whether it’s Amazon Web Services, Microsoft Azure, and Google Cloud platform in infrastructure as a service, or IBM, Dell Technologies, Hewlett-Packard Enterprise, and VMware in multi-cloud hybrid deployments, there are multiple variables for each enterprise. Ditto for software as a service, where the likes of Salesforce, Adobe, and Workday battle SAP and Oracle, an infrastructure- and database-as-a-service player.
That said, a few key trends are emerging for cloud computing in 2020 that have shifted from 2019, 2018, and 2017. At a high level:
• The COVID-19 pandemic and the move to remote work and video conferencing are accelerating moves to the cloud. Enterprises increasingly are seeing the cloud as a digital transformation engine as well as a technology that improves business continuity. As work was forced to go remote due to stay-at-home orders tasks were largely done on cloud infrastructure. Collaboration tools such as Microsoft Teams and Google Meet became cogs in the companies’ broader cloud ecosystem.
• Multi-cloud is both a selling point and an aspirational goal for enterprises. Companies are well aware of vendor lock-in and want to abstract their applications so they can be moved across clouds. The multi-cloud theme is being promoted among legacy vendors that have created platforms that can plug into multiple clouds — often with a heavy dose of VMware or Red Hat. (See: Multi-Cloud: Everything you need to know about the biggest trend in cloud computing and Multicloud deployments become go-to strategy as AWS, Microsoft Azure, Google Cloud grab wallet share),
• The game is about data acquisition. The more corporate data that resides in a cloud the more sticky the customer is to the vendor. It’s no secret that cloud computing vendors are pitching enterprises on using their platforms to house data for everything from analytics to personalized experiences.
• Artificial intelligence, analytics, IoT, and edge computing will be differentiators among the top cloud service providers — as will serverless and managed services. The market share grab has largely gone to AWS, which was early, adds services at a rapid clip, and is the go-to cloud service provider. AWS’ ability to upsell to AI, IoT, and analytics will be critical. Microsoft Azure is also looking to differentiate via AI and machine learning. Google Cloud Platform has gained ground due to its machine-learning know-how.
• Sales tactics that play to fear, uncertainty, and doubt will be the norm. Toward the end of 2019 — not surprisingly right around AWS re:Invent — there appeared to be a mindshare battle in the press as the big three sniped at each other across multiple industries. Google Cloud has been hiring executives to sell into industries and has ramped its Anthos hybrid cloud effort to close its AWS and Azure sales gap. (See: What is cloud computing? Everything you need to know)
• Public cloud spending has hit an inflection point where it has passed traditional IT infrastructure for the first time in the second quarter of 2020, according to IDC. Spending on cloud environments, including public and private, increased 34.4% from a year ago. Non-cloud IT spending fell 8.
• Gartner’s Magic Quadrant report on public cloud providers noted that the “capability gap between hyperscale cloud providers has begun to narrow; however, fierce competition for enterprise workloads extends to secondary markets worldwide.” Indeed, the financials from AWS, Microsoft Azure, and Google Cloud have all been strong.
With that backdrop, let’s get to the 2020 top cloud computing vendors.
AWS was the early leader in public cloud computing and has become a major player in AI, database, machine learning and serverless deployments.
AWS was the first cloud computing and offering infrastructure as a service in 2008 and has never looked back as it launches new services at a breakneck pace and is creating its own compute stack that aims to be more efficient and pass those savings along. AWS has expanded well beyond cloud compute and storage. If processors based on Arm become the norm in the data center, the industry can thank the gravitational pull of AWS, which launched a second-generation Graviton processor and instances based on it. If successful, the Graviton and the Nitro abstraction layer can be the differentiator for AWS in the cloud wars.
In the fourth quarter, AWS delivered revenue of nearly $10 billion to put it on a $40 billion annual revenue run rate. AWS annual revenue run rate accelerated to nearly $41 billion in the first quarter, as sales grew at a 33% clip. In the second quarter, the AWS revenue run rate was more than $43 billion. The trend is obvious.
AWS continued to shine and represents most of its parent’s operating income but was overshadowed by Amazon’s e-commerce unit and the company’s COVID-19 response. Flexera’s State of the Cloud report highlights how AWS and Microsoft Azure are the two alpha cloud companies.
Recent developments for AWS include the launch of AppFlow to design SaaS workflows, Keyspaces, and the general availability of the company’s Windows migration service and savings plans.
Other moves include:
At AWS re:Invent 2019, CEO Andy Jassy outlined a vision for the cloud service provider, including its artificial intelligence service, a stack made for analytics, and a bevy of purpose-built databases. The broader message from Jassy, however, was that AWS will be relentlessly innovating. Jassy also took a few thinly veiled jabs at rivals like Microsoft.
Jassy criticized Microsoft’s licensing practices and said its rival is “not prioritizing what matters to you guys, the customers.” He wasn’t necessarily targeting Azure with his comments, but Microsoft licensing changes that limit how businesses can deploy Windows and SQL Server in the cloud with existing licenses. In addition, Jassy touted that more than half the Windows installations in the cloud run on AWS.
Another thread in the Amazon-Microsoft rivalry. The Pentagon awarded its $10 billion JEDI cloud computing contract to Microsoft over AWS. Amazon appealed and lost as the JEDI contract remained with Azure.
While these sideshows make for good headlines, the upshot is that AWS wants a larger portion of the enterprise IT cloud-spend. AWS has hybrid cloud partnerships with the likes of VMware, developers, ecosystem, and large enterprise customer base to remain in the lead. Simply put, AWS is the profit engine of Amazon and on a run rate pushing $40 billion a year. Nevertheless, the rhetoric between AWS and cloud rivals is likely to get a bit chippy in 2020.
Jefferies analyst Brent Thill noted that AWS contributes about $10 billion of high margin incremental sales a year to Amazon. Those incremental sales are more than Azure and Google Cloud Platform deliver combined. In addition, AWS margins are pushing 30% and driving operating profit for Amazon. Indeed, AWS accounts for the bulk of Amazon’s operating profit.
Here’s what you need to watch with AWS in 2020:
Microsoft Azure, along with Microsoft’s software as a service effort, and footprint in enterprises make it a strong No. 2 to AWS. As enterprises pick preferred cloud vendors, Microsoft will be an option.
The cheap and easy storyline is that Microsoft Azure and AWS are on a collision course to be the top cloud service provider. The reality is that the two foes barely rhyme.
The COVID-19 pandemic provided rocket fuel to Microsoft’s cloud business as a bevy of enterprises used Microsoft Teams for remote work. In addition, Microsoft wrestled with capacity issues due to demand. Those capacity issues continued throughout 2020. Microsoft addressed capacity issues at its Ignite conference after Gartner gave Azure high marks, but raised concerns about outages.
Microsoft CEO Satya Nadella argued that the company’s cloud unit sits in the middle of digital transformation efforts. “We have seen two years’ worth of digital transformation in two months. From remote teamwork and to sales and customer service to critical cloud infrastructure and security, we are working alongside customers every day to help them stay open for business in a world of remote everything,” said Nadella.
To understand Azure’s competitive advantage, it helps to know some history courtesy of ZDNet’s Mary Jo Foley:
Simply put, Azure enjoys an incumbent role with enterprises as a cloud service provider, but pricing will blend multiple monetization models and bundles. The real battle between AWS and Microsoft will revolve around enterprises that go multi-cloud but want one preferred cloud service vendor. Will AWS or Microsoft be the preferred vendor? In that environment, Microsoft is a known commodity that can plug into Salesforce, which picked Azure for its Marketing Cloud, as well as other incumbents such as SAP, Oracle, and Adobe. In addition, Microsoft can pair its cloud offerings into its Microsoft 365 effort, which is a cloud and enterprise software buffet packaged for various industries but may have hidden costs if not negotiated properly.
At Build 2019, Microsoft rolled out a bevy of updates for developers, but the overarching theme was that Azure and cloud services are the center of the company’s platform approach.
Microsoft has also honed its ground game for hybrid deployments as it has deep partnerships with server vendors to create integrated stacks to target hybrid cloud and private cloud.Azure Arc, Azure Stack, and Azure Stack Edge are all examples of these hybrid efforts. Some efforts of note include:
In the end, the Microsoft Azure battle with AWS will boil down to a sales war and thousands of foot soldiers pitching enterprises. You may become a Microsoft cloud customer via Teams, Office 365, Dynamics, Azure, or some combination of them all. The reality is that you’ll have both top cloud service providers in your company and neither one will own the whole stack. Multi-cloud efforts will begin with having Microsoft and AWS in your company. The wallet-share trench war begins there. (See: Can AWS be caught? Here’s how its cloud computing rivals can improve their chances)
Google Cloud Platform and its Anthos platform is working to break into digital transformation budgets. Meanwhile, the cloud provider is looking at expanding in its key verticals such as retail and financial services.
Google Cloud Platform is coming off a year where it built out its strategy, sales team, and differentiating services, but also had performance hiccups. It will also be the target of FUD campaigns based on the idea that Google would rather leave business than be No. 3 to AWS and Azure. However, Google Cloud is getting a lift via COVID-19 and Google Meet and setting up a strategy to manage multi-cloud workloads.
According to Gartner, IaaS will see the fastest-growing public cloud spending at 24% in 2020 due to data center consolidation. The public cloud services market is forecast to grow 17% in 2020 to $266.4 billion, up from $227.8 billion in 2019, said Gartner. In addition, public cloud spending is becoming more concentrated among the big three IaaS providers.
At an annual run rate of $10 billion through the fourth quarter and $11 billion in the first. Google Cloud Platform has been winning larger deals, has a new leader with Oracle veteran Thomas Kurian, and is seen as a solid counterweight to AWS and Microsoft Azure. Kurian appears to be building out an Oracle-ish model where it targets industries and use cases where it can win. Think retail, where customers leverage Google ads, as well as cloud compute without worries about Amazon. Think education. Think finance.
In the first quarter, Google Cloud stumbled onto a hit with Google Meet, which became a hit for remote workers. Aided by Zoom security hiccups, Google rushed into the video conferencing market and coupled G Suite with Google Meet. In the second quarter, Google Cloud built out its ground game and targeted multi-cloud as well as industries.
Google CEO Sundar Pichai said COVID-19 was an inflection point for digital shifts. “Ultimately, we’ll see a long-term acceleration of movement from businesses to digital services, including increased online work, education, medicine, shopping, and entertainment. These changes will be significant and lasting,” he said.
Meanwhile, Google Cloud Platform has been building out partnerships with key enterprise players such as Salesforce, Informatica, VMware, and SAP. The company is also combining its G Suite and Google Cloud sales efforts. At the start of 2019, Google said cloud revenue was evenly split between the two product lines. It’s unclear whether that revenue split holds today.
The Google Cloud Platform strategy requires a team that can sell vertically and competes with the sales know-how from AWS and Microsoft. Kurian has surrounded himself with enterprise software veterans. (See: Former Microsoft exec Javier Soltero to lead the Google G Suite team)
A recent hire is Hamidou Dia as Google Cloud’s vice president of solutions engineering. Hamidou was most recently Oracle’s chief of sales consulting, consulting, enterprise architecture, and customer success. Google Cloud also named John Jester vice president of customer experience. Jester will lead a services team focused on architecture and best practices. Jester was most recently corporate vice president of worldwide customer success at Microsoft.
The additions of Dia and Jester come as Rob Enslin joined Google Cloud as president of global customer operations. Enslin was formerly at SAP.
At Google Cloud Next, the company forged more ties with hybrid cloud players via an effort called Anthos, outlined its industry efforts and leveraged its artificial intelligence know-how. And Anthos is seen as Google Cloud’s big multi-cloud and hybrid cloud play. Anthos is Google Cloud’s effort to target digital transformation and hybrid cloud deployments.
AI, machine learning and analytics are the upsell opportunities for Google Cloud Platform compute and storage. Google will buy companies like Looker to fill out its analytics efforts.
The expectation is that Google Cloud Platform will continue to gain share, but remain No. 3 in 2020. That tension between scale and No. 3 is at the heart of rumors that Google would make a massive cloud play like buying Salesforce. What’s unclear is whether Google would spend about a fourth of its market capitalization and take on a massive integration effort.
Jefferies estimates that Google Cloud will have a 9% market share in 2020. It’s worth noting that the research firm had a much more optimistic expectation of 15% market share to start 2019. Nevertheless, Google Cloud Platform is going to be in plenty of multi-cloud discussions with enterprises.
Alibaba has scaled rapidly with a bevy of enterprise partners. What remains to be seen is whether Alibaba can expand beyond China. In either case, Alibaba has a lot of runway ahead.
If your company has operations in China and is looking to go cloud, Alibaba is likely to be a key option.
Alibaba’s cloud annual revenue run rate is $7 billion exiting its most recent quarter. Perhaps the most notable disclosure was that 59% of the companies listed in China are Alibaba Cloud customers. Meanwhile, Alibaba is building out its next-gen cloud as well as capacity in China, EMEA, and elsewhere.
While Alibaba Cloud flies under the radar for customers that are primarily focused on the EU and US, companies operating in China may use it as a preferred cloud vendor. To that end, Alibaba Cloud is forging alliances with key enterprise vendors and is seen as a leading cloud service provider in Asia.
The catch with Alibaba Cloud is that US-based customers are likely to run into politics, data concerns, and trade wars, but it’s quite possible that Alibaba Cloud can jump the rankings based on revenue just because the Chinese cloud market will be massive.
With the battle between the hyperscale cloud vendors underway, you’d think that the legacy infrastructure players would recede to the background. Instead, the likes of IBM, Dell Technologies, and HPE aim to become the glue between multi-cloud deployments that feature a blend of private and public clouds as well as owned data centers. After all, most enterprises are looking at a multi-cloud strategy.
Former IBM CEO Ginni Rometty has said that a big reason the company bought Red Hat was to accelerate “hybrid multi-cloud” deployments. The argument is that most of the enterprise workloads haven’t moved to the cloud yet and when they do customers are going to want choice. In other words, the same vendors that used to sell you on the concept of one throat to choke are the ones positioned to be the neutral party in the cloud service wars.
The two multi-cloud enablers in this mix are open source pioneer Red Hat, owned by IBM, and VMware, which is owned by Dell Technologies. Toss in Hewlett-Packard Enterprise, Lenovo, and Cisco Systems for solving select issues and you have a vibrant hybrid and multi-cloud space to consider. Here’s a look at the key players that aim to be the point guards of the public cloud and how they’ll connect to the hyperscale providers.
With a $34 billion bet on the Red Hat acquisition, IBM is hoping to juice its revenue growth.
IBM outlined the rationale for the $34 billion Red Hat purchase and its strategy for turbo-charging its growth in the future. The fourth quarter revealed the potential of the Red Hat deal and the first quarter revealed some momentum.
Why is IBM and Red Hat a good combo? Rometty noted that IBM runs 90% of the credit card transactions globally, builds mission-critical apps, and has the installed base of workloads. Red Hat brings the vehicle to chapter two of the cloud. “This takes great incumbency to this journey,” said Rometty. “You have to have trusted relationships with 30,000 clients and an understanding of the processes.”
IBM also outlined a leadership change that cements the company’s multi-cloud and hybrid focus. Arvind Krishna became CEO effective April 6 and outlined his approach and overall strategy. Krishna is the architect of the Red Hat purchase and runs Big Blue’s cloud and cognitive software unit. For good measure, James Whitehurst, CEO of Red Hat, becomes IBM President. Rometty will serve as executive chairman through 2020 and then retire. Add it up and two executives with cloud, open-source, and hybrid cloud experience will be running IBM.
Krishna said on IBM’s first-quarter earnings call:
There are also controls to the Red Hat deal to ensure the software company keeps its open-source cred and remains neutral. For instance, IBM sells Red Hat across its product lines and has multiple integration points, but Red Hat doesn’t sell IBM so it can maintain critical partnerships and maintain neutrality. So far, so good. IBM’s recent earnings reports highlighted how Red Hat helped enable slight revenue growth.
For enterprises looking to go multi-cloud, the IBM plan for Red Hat can resonate. Meanwhile, IBM has a long history in open source software and can be expected to support the community and Red Hat. IBM plans to sell Red Hat horizontally as well as vertically with industry-specific packages called Cloud Paks. IBM also sees itself as an automation play for cloud operations.
IBM’s plans for Red Hat are being implemented; customers, enterprises and Wall Street will be watching closely to see how various packages dubbed Cloud Paks fare.
Dell Technologies is using portfolio company VMware to tie its product lineup together and be the glue of multi-cloud deployments.
VMware has an incumbent position, key partnership with AWS, and a parent in Dell Technologies that is using the cloud management platform to power its own platform. VMware has a knack for evolving as the cloud ecosystem shifts. For instance, VMware was focused primarily on virtualization and has fully adopted containers. VMware powers legacy enterprise data centers, but has extended to being the connector to public cloud providers after being a leader in private cloud deployments. In addition to its lucrative AWS partnership, VMware also has partnerships with Microsoft Azure and Google Cloud Platform. And for good measure, VMware has integrated system partnerships with multiple hardware vendors.
The company’s VMworld 2020 virtual conference also highlighted how the company is eyeing AI workloads via partnerships with Nvidia as well as architectures such as Project Monterey to scale them.
Recent headlines give a flavor for VMware’s evolution and where it fits into the enterprise mix:
So, where does Dell Technologies fit? Like IBM and Red Hat, Dell Technologies is looking to VMware as the software glue to give it a cloud platform that can span internal and public resources. VMware is the linchpin to the Dell Technologies’ cloud effort.
Dell Technologies’ long-game for the hybrid cloud revolves around a leadership position in integrated and converged systems, a vast footprint in servers, networking, and storage, and VMware’s ability to bridge clouds.
At Dell Technologies World conference in Las Vegas, the company outlined a hybrid cloud strategy that aims to knit its data center and hybrid cloud technologies with public cloud providers such as Amazon Web Services and IBM Cloud with more to come. The effort is dubbed the Dell Technologies Cloud. VMware is also launching VMware Cloud on Dell EMC, which will include vSphere, vSAN, and NSX running on Dell EMC’s infrastructure.
In addition, Dell Technologies is launching a data-center-as-a-service effort where it manages infrastructure in a model that lines up with cloud computing one-year and three-year deals. VMware Cloud on Dell EMC is also designed for companies running their own data centers, but want a cloud operating model. Dell Technologies data center as a service effort is built on a VMWare concept highlighted last year called Project Dimension.
Enterprises are likely to be either in the Red Hat or the VMware camps and both companies have big parents that have the scale into private clouds and hybrid data centers.
HPE is looking to be a hybrid and multi-cloud player, but its secret sauce may be extending to the edge with Aruba.
Hewlett Packard Enterprise’s hybrid cloud strategy revolves around its stack of hardware — servers, edge compute devices via Aruba, storage and networking gear — and its various software platforms such as Greenlake, SimpliVity, and Synergy. HPE prefers the term “hybrid IT” over multi-cloud, but its approach rhymes with what IBM and Dell Technologies are trying to do. The catch is that HPE doesn’t have the scale that Red Hat and VMware have.
Nevertheless, HPE has key partnerships with Red Hat, VMware, and integrated and converged systems with cloud providers. HPE’s stated goal is to offer its entire portfolio as a service over time. HPE CEO Antonio Neri outlined the strategy in an interview with ZDNet. Neri said:
We want to be known as the edge-to-cloud platform as-a-service company. And in that there are three major components. One is, as-a- service because obviously customers want to consume their solutions in a more consumption driven, pay only for what you consume. And that experience, at the core is simplicity and automation for all the apps and data, wherever they live.
Obviously, the edge is the next frontier. And we said two years ago that the enterprise of the future will be edge-centric, cloud-enabled and data-driven. Well, guess what? The future is here now. The edge is where we live and work.
Where HPE’s approach to hybrid deployments is differentiated is in its Aruba unit, which provides edge computing platforms. HPE aims to extend its cloud platform to edge networks. That cloud-to-edge approach could pay off in the future, but edge computing is still a developing market. In the meantime, HPE is tapping into Azure for management talent.
Keith White, a former Microsoft executive, will lead HPE’s Greenlake business, which aims to help transform the company into an as-a-service juggernaut.
HPE is also looking to address container management and sprawl with its BlueData software.
Cisco is taking a network-centric approach to multi-cloud and hybrid deployments.
Cisco Systems has a bevy of multi-cloud products and applications, but the headliner is ACI, short for an architecture called Application Centric Infrastructure. Cisco is also melding AppDynamics, cloud management, and DevOps.
Not surprisingly, Cisco’s approach to multi-cloud is network-centric and ACI focuses on policy, management, and operations for applications deployed across cloud environments.
Cisco has partnerships with Azure and AWS and has expanded a relationship with Google Cloud. Add in AppDynamics, which specializes in application and container management, and Cisco has the various parts to address hybrid and multi-cloud deployments. In addition, Cisco is a key hyperconverged infrastructure player and its servers and networking gear are staples in data centers.
Software as a service is expected to be the largest revenue slice of the cloud pie. According to Gartner, SaaS revenue in 2020 is expected to be $166 billion compared to $61.3 billion for IaaS.
For large enterprises, there are a few realities. For starters, you’re likely to have Salesforce in your company. You’ll probably have Oracle and SAP, too. And then there may be a dose of Workday as well as Adobe. We’ll focus on those five big vendors and their prospects. It’s also worth noting that some of the previous vendors mentioned are primarily SaaS vendors. Microsoft Dynamics and Office are two software products likely to be delivered as a service. Your roster of software providers is as diverse as ever.
Here’s a look at the leading cloud software vendors.
Salesforce’s goal is to be the center of your customer data universe.
Salesforce’s ambitions are pretty clear. The company wants to enable its customers to utilize its data to provide personal experiences, sell you its portfolio of clouds, and put its Salesforce Customer 360 effort in the center of the tech world. In 2020, Salesforce expanded its reach with Work.com, a suite to enable workers to head back to the office during the COVID-19 pandemic.
Recent developments highlight Salesforce’s approach to invest through a downturn.
Salesforce executives have outlined the road to doubling revenue in fiscal 2025. Indeed, Salesforce has acquired or built out what could be an entire enterprise stack as it pertains to customer data. Its acquisition of Tableau may also be transformative since the analytics company has a broader footprint and gives Salesforce another way to reach the broader market.
What remains to be seen is whether Salesforce’s Customer 360 platform can bring all of its clouds together in a way that prods enterprises to buy the entire portfolio in a SaaS buffet. At its analyst meeting, Salesforce noted that it had one customer in its top 25 with five clouds from the company, no customer with six, and a handful with three or four clouds.
Salesforce will need its top customers to adopt more clouds if the company is going to get to its $35 billion revenue target in fiscal 2025.
Salesforce’s current lineup consists of clouds for integration, commerce, analytics, marketing, service platform, and sales. Service and sales clouds are the most mature, but others are growing quickly. Salesforce’s Einstein is an example of AI functionality that’s an upsell to its clouds. In the end, Salesforce sees a $168 billion total addressable market. Work.com could add more to that tally.
Oracle is moving its on-prem customers to the cloud and also finding some new audiences.
Oracle does infrastructure. Oracle does platform. Oracle does database, which is increasingly autonomous. Despite its IaaS and PaaS footprint, Oracle is mostly a software provider when it comes to cloud. With the addition of NetSuite, the company can cover small, mid-sized, and large enterprises.
While Oracle came into 2020 as an afterthought in IaaS, it has had an eventful second half of the year. Oracle landed Zoom as a reference customer for its cloud and is seeing momentum. Oracle also is in the running to be the premier technology partner of TikTok.
Edward Screven, Oracle’s chief corporate architect, said in an interview that the company is expanding its hyperscale reach for IaaS and plans to hit 36 facilities by the end of the year. While SaaS is core, Oracle is also landing new users with infrastructure and a free tier. “A lot of conversations we have are about SaaS, but enterprises need to build SaaS using the tools we have so they look at the platform. And everyone is looking for a fast, reliable and cost-effective compute,” said Screven.
In other words, IaaS players start with compute and storage and move up the stack. Oracle can start at the high end and work back into infrastructure. “AWS was first, but we have a lot of customers with experience already with Oracle Cloud,” he said. Screven said that Oracle Cloud is seeing more developer interest due to a free tier.
The big win for Oracle’s cloud business will be SaaS and autonomous database services. Oracle’s cloud is optimized for its own stack, and that will appeal to its customer base. Oracle’s Cloud at Customer product line is also appealing to hybrid cloud customers. Oracle will put an optimized autonomous database in an enterprise and manage it as if it was its own cloud.
Will Oracle go multi-cloud and partner with frenemies? Yes and no. Microsoft Azure and Oracle are partnered to combine data centers and swap data with speedy network connections. Oracle isn’t likely to partner with Google Cloud given its court battles with the company. Oracle isn’t likely to cozy up to AWS either.
For enterprises, Oracle’s cloud efforts will be powered by SaaS and it will be a player in other areas. It’s unclear whether Oracle’s bet on what it calls Generation 2 Cloud Infrastructure will pay off, but its enterprise resource planning, human capital management, supply chain, sales and service, marketing, and NetSuite clouds will keep it a contender.
SAP is leveraging a neutral approach with partnerships with all the leading IaaS vendors while converting customers to its HANA platform.
SAP CEO Christian Klein is looking to keep its cloud momentum, expand HANA and Qualtrics and battle Salesforce, Oracle, and Workday.
Based on recent earnings reports, SAP is holding its own well even as it flies under the radar relative to more chatty rivals.
Klein on SAP’s second earnings conference call outlined how the company is focusing on its core markets as well as partnering.
Let me revisit a few key elements of our strategy: number one, a clear focus in our existing markets, doubling down on categories where SAP has a why to win; differentiating via the broadest and deepest suite; end-to-end integration; real time analytics; fully enabled artificial intelligence with concrete outcomes for our customers; a harmonized user experience; and very importantly, our leadership in experience management. Our PLM and intelligent asset management partnership with Siemens is a prime example for this new focus, two market leaders coming together to take over the lead in Industry 4.0.
Number two, accelerate growth by expanding into new markets. The industry cloud. All industries are transforming, and every new business model requires data and a strong integration into the backbone, which, in many cases, is in SAP’s core application. This is our why to win. We will build modular industry apps, helping our customers to stay competitive in their industry by adapting to new business models with a fast time to value. We are co-innovating on our platform with our partners and customers
SAP has indicated that it will be open and multi-cloud to give customers choice. That approach could play well going forward. SAP’s cloud portfolio includes:
Klein noted that SAP’s cloud revenue increased by 30% each year from 2015 to 2018 and the company has a foundation to scale from there. According to Klein, SAP’s cloud growth will occur by “infusing artificial intelligence into business processes.” Ultimately, SAP is looking to enable intelligent enterprises via its position of offering a single version of the truth.
Perhaps SAP’s biggest challenge is convincing its customer base to move to SAP Cloud. Klein noted that “70% of SAP’s ERP customers have yet to adopt our cloud solutions.”
Workday became a leading enterprise cloud player via human capital management software, but is expanding its footprint with financial applications.
Workday has more than 3,000 customers and the human capital management software vendor is increasingly adding financial management customers too. As a result, Workday is among the cloud vendors gaining wallet share, according to a Flexera report.
The company is at an inflection point where it is selling more clouds and has a big market to chase as it courts mid-market companies. While the SaaS menu at Workday is decidedly more limited than what rivals SAP and Oracle offer, the company enjoys tighter focus.
Workday co-CEO Aneel Bhusri said that his company is entering an expansion phase that rhymes with the Salesforce playbook. Workday ultimately sees its financial platform being the equal of its HR footprint. Planning and procurement are other new areas. Ultimately, Workday’s SaaS challenge will be to sell multiple clouds to customers.
“I would point you to the transition that Salesforce went through. They’re 6 years older than us, one of our best partners. They went from being a sales company to a sales and services company to a sales and service and marketing company and platform. Now they’ve got analytics. We’re going through that same journey and growth rates kind of ebb and flow as the different pillars take off.”
Workday is infusing machine learning and automation throughout its platform.
Adobe’s cloud plans revolve around expanding its customer base and total addressable market as content and data increasingly merge.
Adobe has been a well-established cloud vendor among content creators and marketers, but a plan to focus on digital experiences and data management will put it on a collision course with the likes of Salesforce, Oracle, and SAP in areas like marketing. So far, so good.
For enterprises, Adobe’s plan to dramatically expand its total addressable market can be a good thing — especially if the company can be used as leverage against incumbent providers.
Adobe’s annual revenue is now north of $11 billion and the company’s cloud portfolio has a unique set of assets that combines content, analytics, AI and experiences. In addition, Adobe has hired former Informatica CEO Anil Chakravarthy as head of its digital experience unit. The move highlights how Adobe sees data integration as key to its expansion.
The company has been targeting digital transformation projects and a recent investor meeting highlighted the following:
Add it up, and Adobe is targeting fiscal 2020 revenue of $13.15 billion. The challenge for Adobe will be positioning itself in the middle of CRM, inventory, ERP and enterprise applications, ingesting the data and delivering experiences. That position is the same one-eyed by Salesforce.
Under CEO Bill McDermott, ServiceNow has honed its ground game and expanded its market as a platform of platforms.
ServiceNow has had a strong 2020 and has emerged as a SaaS provider delivering growth and becoming a platform of platform for various workflows.
Although ServiceNow is best known for its IT service management platform, it has expanded into a bevy of other corporate functions. In addition, CEO Bill McDermott has aimed the ServiceNow platform at industry specific use cases. McDermott said:
Before getting into our strong results, here are a few trends shaping the overarching environment for ServiceNow. This unprecedented environment is breaking physical supply chains. It is exposing the weak links in the old value chains, illuminating how companies struggle cross-functionally to deliver the workflows that create great experiences for customers, employees and partners. The world is experiencing a seismic shift from the obsolete business process evolution to the new workflow revolution.
The game plan for ServiceNow is to be a digital transformation engine by connecting systems of records to be a system of action. The plan has been working as its Paris release of the Now Platform has integrated features designed for industries.
One key example is how ServiceNow has aimed its platform at back-to-work management efforts. Among the key 2020 developments for ServiceNow: