Swiss online magazine Computerworld.ch recently sparked a furore with an article entitled: "The cloud: The lure of big rewards -- but not everyone’s a winner." The authors tried to find out what cloud customers want and what cloud providers need to do in response. After all, there’s no doubt that Swiss IT managers want the cloud; it’s just that the uncontrollable risks are giving them headaches. This is a feeling they share with their counterparts in the rest of Europe.
The Swiss market has already progressed beyond cloud basics like email, e-commerce, and shopping solutions. Companies are now starting ambitious transformation projects and relocating more business-critical applications such as customer relationship management (CRM), enterprise resource planning (ERP), and supply chain management (SCM) to the cloud. According to research by Computerworld, Hewlett-Packard is in the process of transferring its CRM worldwide from Oracle/Siebel to cloud pioneer Salesforce. IBM has trumpeted marketing service nViso and TV service provider OTRUM as two reference clients for its SmartCloud services.
Swiss enterprises are debating risks like vendor lock-in -- dependence on a single cloud provider -- and security issues much more vigorously than their counterparts in the United States or Asia, said Markus Zollinger, director Cloud Computing at IBM Switzerland. These concerns and the desire for individual, measurable service level agreements (SLAs) have resulted in many Swiss companies preferring private cloud solutions for business-critical applications and sensitive data.
So what do cloud customers want, exactly? Apparently, local storage and standards.
A recent survey by MSM Research of 108 Swiss companies asked whether local data storage (i.e., maintaining a datacenter in Switzerland) was a key success factor for cloud providers; 44.8 percent of the respondents agreed wholeheartedly that it was, while another 27.6 percent partly agreed. An even higher share called for cloud standards and cloud certificates to counteract dreaded vendor lock-in. The reason for this is that in a standardized cloud, customers can easily switch from their current cloud provider to a cheaper, more powerful competitor.
And what do cloud providers need to offer?
Leaving the concerns to one side for a moment, SaaS is very popular in Switzerland, too. Forrester forecast that in 2012, SaaS will have a global market volume of $33 billion. Last year, SaaS already accounted for easily the lion’s share of cloud turnover with revenue reaching $21 billion -- and its upward trend is expected to continue over the next few years. Market drivers are sales solutions, CRM, payroll accounting, and human resources. For example, Swiss food corporation Nestlé is now using cloud-based human capital management (HCM) developed by SAP/SuccessFactors.
What about other cloud solutions?
The pioneering market for business-process-as-a-service (BPaaS) cloud solutions, such as those provided by Software AG and Cordys Process Factory, is only just emerging.
By contrast, infrastructure-as-a-service (IaaS) -- cloud-based computing/servers and storage -- is expected to peak in 2014 before stagnating and subsequently shrinking significantly as of 2020. By comparison, Forrester predicts global SaaS revenue to reach $132 billion by 2020, while that same year the IaaS market is only expected to have a market volume of $4.78 billion.
SaaS is where the big bucks lie. Although IaaS boasts impressive advantages including scalability and significantly lower IT overheads thanks to pay-per-use models, it’s set to quickly become a commodity, whereupon prices will drop. Like their peers in other developed nations, Swiss enterprises will heavily invest in SaaS and cloud, while avoiding vendor lock-in and calling for standards and stringent security measures.
— Charlotte Erdmann comments on a wide range of technologies from her base in Berlin. In addition to blogging, she is a media and communication consultant, organizing and managing large customer magazines and marketing activities within the IT industry.
I have the impression we're seeing a divergence between SaaS customers and IaaS customers, with PaaS occupying a less interesting middle ground. Correct?
@Paul: I asked this question the context of cloud industry in Switzerland. It's good to see businesses using cloud services but what a country wants is to also develop it's own cloud vendors so that the IT imports don't rise a lot.
I don't think it's illegal to have your cloud vendor in some other country.
@Paul: I think it's only a myth that public clouds are any less secure than private clouds. It stems out of trust issues that people have that if something's not in their control and it's shared it's likely to be unsecured.
I believe that the use of SaaS and IaaS are all new dimensions that many customers are adjusting to know how to use and position to get the best value.As Mitch points out, one has to truly know how to design and use the technology in order to get the best cost/value.
I am of the opinion that we will continue to evolve with new models of SaaS and other technology structures in hybrid designs. The new versatility, as pointed out in the article, opens many new doors.
What are the rules about sovereighty and privacy about data in the cloud in Switzerland? That's increasingly becoming an issue, particularly for European companies. Since Switzerland has a reputation for privacy and security with its banks, it seems to me that it would be a great opportunity for them if they had similar levels of privacy for cloud data.
Cost is a major issue with cloud. The upfront costs are smaller, they're operational rather than capital, and you can pay for capacity only as you need it, rather than having to pay for the maximum capicity you need before you even need it.
But there are other issues that might become more costly later, and vendor lock-in is one of those.
"Vendor lock-in is certainly a risk of cloud. If you buy software, you have the software forever, but if you sign a cloud contract, you lose your application when the payments stop."
The challenge for businesses too is that these softwares are very expensive. With the Cloud,you can access softwares and applications as and when they are needed. Vendor lock-in as you rightly measured is a a very big and critical risk but as Charlote also noted, many users of the cloud are nor developing niche SLAs that will give them some leeway to move to other cloud providers without too much of a hassle.
If the answer tthe first part of the question is a 'Yes', wouldit make any difference to how Swiss companies appraoch cloud services? Ialso would like to know from Charlotte if having a national cloud provider is better from from alegal point view than havning a cloud provider who is in a different geographic boundary?
The underlying fact about Cloud is that they lead toa very big economies of scale. I dounderstand the need for maintaining a private cloud but I just have a feeling that
the cost to maintain such clouds does undercut the economic benefit of cloud computing. Can we make public clouds more better and secure so as to see a reduction in the use and development of private clouds?
Vendor lock-in is certainly a risk of cloud. If you buy software, you have the software forever, but if you sign a cloud contract, you lose your application when the payments stop.
The lines are getting blurry as software comes to require licensing. And without support, the value of software is reduced.
Local storage is an issue throughout Europe and the world, as enterprises want to be sure their data is stored in a favorable legal climate.
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