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Two reports have hit this publication’s inbox around the ‘state of the cloud’ in recent days; a study from RightScale argues the market is growing at a solid clip, while the summary from Bessemer Venture Partners’ (BVP) Byron Deeter found an industry which struggled at the start of 2016 but has since roared back.
While both reports differ – RightScale focuses on the adoption and vendors, while Deeter looks almost exclusively at the financial angle – there are common threads. Here, we look at the standout takeaways from both studies:
IPOs down but M&A skyrockets
Deeter affirms a point this publication has previously been making; IPOs in the cloud space have run dry. The total figure of five – Twilio, the standout, alongside Blackline, Coupa, Apptio and Everbridge – is the lowest since the financial crisis of 2008. Yet this, compounded with the resurgence of the industry towards the end of last year, means a huge amount of merger and acquisition activity as companies jockey for position.
Companies acquired represent 40% of the $300 billion market cap, including LinkedIn, bought by Microsoft, NetSuite, bought by Oracle, and AppDynamics, acquired by Cisco just last month:
The top 100 private cloud companies, as noted by Forbes in September with Slack, Dropbox and DocuSign at the summit, represents more than $100 billion of private enterprise value alone, Deeter adds.
AWS stays flat while Microsoft builds momentum
RightScale’s report interviewed more than 1000 technology professionals, across a wide range of industries, and covered the full gamut, from vendors, to DevOps tools, to multi-cloud strategy. Regarding the IaaS race, the report found that while Amazon Web Services (AWS) usage stayed the same year over year used by 57% of respondents, Azure went up from 20% to 34%.
This is a trend which has been apparent for several months, from Microsoft edging their way ahead of the pack and clearly into second place, to the gargantuan share of Amazon slightly being eaten away. AWS posted $3.5bn in revenue for the most recent quarter, up from $3.2bn in Q3.
As Synergy Research put it in their analysis earlier this month, a few cloud providers are growing at ‘extraordinary’ rates yet AWS ‘has no intention of letting its crown slip’. According to those polled, 41% of workloads on average run in the public cloud compared to 38% in private – although this number still marginally favours private when it comes to enterprises – with overall private cloud usage falling from 77% to 72% of respondents year on year.
On another note, Workday, one of the key bellwethers in Deeter’s market cap analysis – and particularly so given LinkedIn’s acquisition – migrated over to AWS as its preferred public cloud supplier back in November.
Follow Dropbox and Slack’s lead if you want to grow
As this publication reported earlier this month, Dropbox announced it had become the fastest SaaS company to hit the $1 billion revenue run rate threshold. Unlike its contemporary Box, Dropbox is ‘not in any rush’ to go public any time soon, according to a Business Insider report. Yet a slide from BVP argues this is ‘the new growth standard’.
Looking further down the scale, BVP argues that if you want to be the best, your company needs to take no more than two years to get to $10m in annualised run rate, and five years to move to $100m. Part of this is down to the astonishing growth of Slack (below):
A report from Okta in January analysing enterprise applications described the company’s outlook as ‘nothing short of jaw-dropping’. One executive this reporter spoke with – formerly of Microsoft’s parish – said there may be an element of not using Microsoft products because of the brand heritage and thinking ‘what is another enterprise tool which isn’t based around email but around communications…oh, Slack’ about its success, although adding the company had “done extremely well [with a] useful product.”
DevOps salad days and skills gap challenges
RightScale found that 30% of enterprise respondents are today adopting DevOps throughout the whole company; a number which went up from 21% this time last year. Docker, with 35% of the vote, was the most popular tool, ahead of Chef (28%), Puppet (28%), and Kubernetes (14%).
The question of DevOps and how organisations are doing it usually leads to concerns over a lack of skills to be able to realise their implementations. Going against the grain of other recent research, fewer RightScale survey respondents in 2017 said lack of resources and expertise was their biggest challenge, down to 25% from 32%.
According to a report from Claranet earlier this month, financial services organisations are the trailblazers when it comes to DevOps, while Robert Half Technology found that almost three quarters of UK CIOs polled frequently encounter IT professionals who were not up to their needs.
You can find out more about the RightScale report here, and the BVP report here.
Main picture credits: Bessemer Venture Partners