PaaS Announcements Continue the SaaS Revolution

As you might expect, I’ve been following the steady stream of recent cloud-related announcements with great interest. While each holds individual significance, it seems most important to step back and try to examine the growth of on-demand business services from a macro perspective. In my search for context, three data points have particularly stood out in the past week: the public cloud offerings announced by Progress and Red Hat in the platform-as-a-service (PaaS) category, and Oracle teaming up with its past rival, Salesforce.

Let’s first take a look at the partnership between Oracle and Salesforce. More than almost any company, Oracle represents the old guard of business computing. For decades, Oracle has been the default vendor of on-premise database software, as well as a popular supplier of customer relationship management (CRM), enterprise resource planning (ERP), and supply chain management (SCM) solutions. Founded by Oracle veterans, Salesforce is arguably the first and most successful cloud company, with a completely disruptive technology in their software-as-a-service (SaaS) interpretation of CRM. The significance of this newly forged alliance between the two companies seems obvious: Oracle has seen the future, and that future is in the cloud.

Red Hat and Progress are offering their own takes on another disruptive technology in the forms of OpenShift and Pacific, respectively. Both PaaS products are public cloud implementations, competing with and improving upon the traditional hosted data center. The most obvious advantage of a true multi-tenant cloud offering over the traditional model is its scalability. Choosing a PaaS strategy completely changes the game by making resources for new or expanding projects available immediately.

The next step in assimilating this news is to consider how these seemingly very different announcements relate to each other. I believe we are seeing a fundamental shift in the way businesses are built and operated. The growing popularity of both SaaS and PaaS approaches is the logical progression of what we’ve seen in other areas over several years. Consider, for a moment, two other former components of most businesses: catering and payroll. If we go back in time, businesses of a certain size would have a cafeteria, and the workers in that cafeteria would be regular employees. Similarly, those businesses would also have a number of accounting employees devoted to payroll.

At some point, competitive pressures force all businesses to streamline their operations. In many cases, making changes hinges more on management attitude and judgment than on enabling technology. The eventual result is a decision to ask hard questions about business focus and the importance of stem-to-stern control and management. Do I view feeding my employees as a core competency to my business? Do I view the tracking of taxes and payroll withholding as core competencies of my business? Although both functions are quite important, for many companies, the answer to both of these questions is a resounding “no”.

What we see happening in information technology is the logical successor to those decisions about what really defines a critical business function. Not every business needs a staff of software developers and support personnel, nor does every business need their own data center. The emerging litmus test seems to be whether or not a given business unit is part of the company’s revenue stream and core competency. If certain aspects of a business are cost centers and not core functions, it’s probably a good sign that more money can be made by outsourcing those functions and focusing resources on core competencies.

So where can we anticipate seeing significant developments in the near term? From my position here at Aria, anything related to cloud billing is always on my radar, and I can’t help asking how these companies are going to manage channel operations as they migrate into the cloud. An immediate cascade of questions presents itself: How will channel business models be supported in a cloud environment? How does that work in a business world? How does that work in a billing world? How are cloud businesses going to leverage traditional channel models in the cloud?

Stay tuned.

Andy Eliopoulos, Aria Systems

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About the Author

Andy Eliopoulos
View more of Andy's posts now at the Aria Blog.

The Forrester Wave: Subscription Billing Platforms, Q4 2015

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