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Top cloud providers: AWS, Microsoft Azure, and Google Cloud, hybrid, SaaS players
Cloud computing in 2021 became the de facto choice of IT due to digital transformation shifts accelerated by remote work and the COVID-19 pandemic. Here's a look at how the cloud leaders stack up, the hybrid market, and the key SaaS players.
Cloud computing in 2021 has become the go-to model for information technology as companies prioritize as-a-service providers over traditional vendors, accelerate digital transformation projects, and enable the new normal of work following the COVID-19 pandemic.
And while enterprises are deploying more multicloud arrangements the IT budgets are increasingly going to cloud giants. According to a recent survey from Flexera on IT budgets for 2021, money is flowing toward Microsoft Azure and its software-as-service offerings as well as Amazon Web Services. Google Cloud Platform is also garnering interest for big data and analytics workloads. But hybrid cloud and traditional data center vendors such as IBM, Dell Technologies, Hewlett-Packard Enterprise, and VMware have a role too.
Meanwhile, Salesforce, ServiceNow, Adobe, and Workday are battling SAP and Oracle for more wallet and corporate data share. Salesforce and ServiceNow launched successful back-to-work enablement suites and cemented positions as major platforms.
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. Zoom not only lands subscription revenue, but also runs on cloud providers such as AWS and Oracle.
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.
Every flavor of cloud vendor wants to be a management layer to manage your other clouds. Public cloud vendors such as Google Cloud Platform and AWS have offerings to manage various cloud services. Traditional enterprise vendors such as Dell and HPE do too. Which platform becomes that "single pane of glass" for cloud management will be positioned well.
There's a sales war happening by industry. Cloud providers are going vertical to corner industries. 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.
Microsoft Azure, along with Microsoft's software-as-a-service effort and its footprint in enterprises, make the company a strong No. 2 to AWS. As enterprises pick preferred cloud vendors, Microsoft will be an option.
Commercial cloud is a roll-up of multiple services from Microsoft. Enterprises are likely to buy a buffet that includes Azure but isn't totally focused on it. That said, Microsoft commercial cloud annual revenue run rate is closing in on $70 billion.
Microsoft Azure benefits from its software-as-a-service footprint. The reality is that we could easily take Microsoft out of the IaaS category and put it in the SaaS section since most of the revenue is derived from Office 365, Dynamics, and a bevy of other cloud services that are software-based over infrastructure.
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:
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 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.
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.
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 multicloud deployments that feature a blend of private and public clouds as well as owned data centers. After all, most enterprises are looking at a multicloud strategy.
The two multicloud 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.
One key item to watch is how IBM blends its cloud and hybrid approach with emerging technologies. Consider:
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.
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. Dell Technologies is also aiming to deliver everything as a service.
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 camp, and both companies have big parents that have the scale into private clouds and hybrid data centers.
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 multicloud, 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.
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.
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 hyper-converged 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 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.
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. Slack will also bring more customers and reach to Salesforce.
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 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.
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.
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.
Instead of doing everything ourselves, we are co-innovating. We have always been the leading on-premise application platform. Thousands of partners and customers have built applications and extensions on SAP for almost 50 years. Our intention is to repeat that for the cloud to position SAP as the leading cloud platform to transform and change the way enterprises work in the digital age. To get there, we have put a lot of work into our cloud platform over the past 12 months, and we will continue to invest in innovation. The time when SAP developed and engaged with customers in silos are over.
SAP's 2021 plan is to migrate its customers to the cloud faster and create one data model. Klein added:
We will bring the full force of our business applications and platform to drive holistic business transformation. By enabling our customers to seamlessly design, evolve or in win new business models with agility and speed. To do so, all our main solutions will adopt the cloud platform and share one semantical data model, one AI and analytics layer, one common security and authorization model and the same application business services such as workflow management, with our cloud platform, powered by SAP HANA. Process can be changed, enabling agile workflows. Innovations and extensions can be developed quickly by customers and partners accessing our open platform, using exactly the same data model in business services as our own SAP app. We are convinced that the real value driver of intelligent enterprises in the cloud will be the ability to adapt and on new business model holistically end-to-end with one consistent data model.
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.
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.
The company is also looking to be a key part of your data and digital transformation strategies. 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. "Every single business is going through the same digital transformation that we were lucky enough to go through almost a decade ago. And if a company cannot engage digitally with the customer, understand how the funnel, all the way from acquiring customers to renewing them, can be done digitally, they're going to be disadvantaged," said Adobe CEO Shantanu Narayen.
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.