Cloud killing the enterprise software market? Hold that thought

Will vendors learn to capitalize on cloud the same way they adapted to SOA?

"Imagine a world where enterprises no longer purchase software at all!"

That's how ZapThink's Jason Bloomberg sizes up the latest potential threat to vendors' cash cows. The possibility that enterprises will simply tap into the cloud for what they need -- rather than shelling out oodles of dollars, euros, rupees, or pounds for onsite software -- certainly must be a troubling prospect.

Credit: NASA

Credit: NASA

One of the things I pondered quite a few times here at this blogsite over the years is how vendors felt promoting a paradigm (SOA) that encourages the use of standardized, hot-swappable software components. In other words, making their software extremely, extremely expendable. Rather than upgrade to the next version of that ERP system, build services around it that do the job required to keep up with the business.

Well, Oracle, SAP, IBM, HP, and Microsoft have been able to capitalize very nicely on service oriented architecture in a very big way, thank you, turning in into an industry in itself -- with middleware, brokers, development tools, governance tools, and consulting.

Will things be different with cloud? Jason compares the specter to SOA a few years back -- and taking the situation a bit further:

"As their customers started figuring out that SOA success didn’t depend on buying new software after all, but rather was a better way to organize existing IT assets, now cloud computing may replace the need to own those assets altogether."

Do the platform vendors really have something to fear this time around, or does it mean adopting a new business model -- and perhaps, as we've seem big time with SOA, buying their way into the new realm with lots of strategic acquisitions?

Jason invokes a couple of hard-won lessons that came out of the SOA struggle these past few years. First, don't be enamored by the technology. Build the business case, design the service, then decide what technology fills the need. In other words, don't expect enterprises to be moving en mass to a software-less world just because cloud is this year's flavor. Sure, cloud will offer a lot of compelling solutions, especially in startup situations (in large and small companies). But, as Jason points out, the element that the cloud requires to succeed in addressing business requirements is governance -- this is where years of SOA work and vendor investments will begin to pay off.

In addition, let me add that if anything, there will be a lot of reliance on private clouds and hybrid approaches. Enterprises will be both producers and consumers of cloud-based services. Yes, the lines will blur between software vendors and end-user customers. But either way, that still calls for lots of infrastructure investments by enterprises.