Two types of fear, or how to win in the next stage of the cloud

As companies look to move their core business applications to the cloud, smaller, more specialized industry cloud providers have a chance to be the new heroes of business tech.
Written by Jason Hiner, Editor in Chief

"The real opportunity is moving mission critical systems in the cloud. [Industries] are the biggest hold out. We see that as the biggest opportunity." That's how Stephan Scholl, co-president of Infor--an enterprise software company that specializes in solutions for specific industries--explains what he sees when he looks at the cloud market.

For all of the endless hype about cloud computing over the past five years, most companies have remained slow to move their most important applications to the cloud. Sure, the cloud has been good enough to run a few experiments and save big money on licensing fees with less critical apps like HR and collaboration and some overly-glorified shared address books. That's because if those services go down or get hacked or employees have a slow internet connection then it's no big deal because people can still get their work done. It's different when it comes to the software that your whole company is logged into every minute of the business day.

That was the conventional wisdom. But, it's starting to change.

Large enterprises, SMBs, startups, and everything in between are now taking a hard look at moving their core business applications to the cloud. While that obviously includes software like ERP and financial systems, the even more interesting story is the software that's specific to each industry--insurance, healthcare, manufacturing, real estate, etc.

These industries all have specialized needs because they all have very different kinds of business processes. In many of them there are even sub-specialties within industries that have even more specialized needs.

For years, big software providers like Oracle, SAP, IBM, and HP have been taking their big software solutions for managing business processes and slicing them into industry-specific solutions. And, of course, they'll also send an army of consultants who can help you customize those solutions to your specific company--for a big fee.

All of these big software providers are now trying to transition their solutions to the cloud, or offer private cloud or hybrid cloud solutions. They usually aren't in a hurry to make this switch because it means swapping lucrative licensing and maintenance fees for software-as-a-service subscription fees. But, customer demand is driving the move to SaaS, and so is a host of new competitors--smaller, industry-specific vendors who can better cater to the needs of specific industries and sub-specialties.

Many of these smaller vendors are SaaS-first or have been able to navigate the transition to the cloud must faster because they are smaller and more narrowly-focused. We refer to this emerging movement as the "industry cloud" and we recently released a joint ZDNet-TechRepublic special feature on the industry cloud to delve into how it's affecting businesses of all sizes and in various industries and to give our readers some guidance and best practices for navigating it.

If you're faced with the decision of sticking with a traditional vendor or trusting an upstart cloud company with your company's most important applications and data, then I'd definitely suggest reading our special feature to understand all of the nuances involved, as well as the drawbacks of going with an upstart cloud provider.

But, I'll also boil down the decision-making process for you. In this type of decision, there are two types of fear. And, it depends on which one motivates you more. If you have a solid market advantage to protect and don't need to innovate so much as simply remain steady and stable, then you should probably stick with your traditional vendor. Your biggest fear is making a mistake that could rock the boat.

On the other hand, if your biggest fear is getting lapped by a competitor because you can't move fast enough, then you should give some serious consideration to the industry cloud upstarts, who can give you some important shortcuts and more hands-on service. They can also enable you to punch above your weight limit.

And just to give you a little perspective on how the industry cloud is suddenly reshaping things, take a look at the following data point from the original research we did as part of our special feature:

Source: Tech Pro Research

ZDNet's Monday Morning Opener is our opening salvo for the week in tech. As a global site, this editorial publishes on Monday at 8am AEST in Sydney, Australia, which is 6pm Eastern Time on Sunday in the US. It is written by a member of ZDNet's global editorial board, which is comprised of our lead editors across Asia, Australia, Europe, and the US.

Previously on Monday Morning Opener:

Editorial standards