The Cloud’s Ripple Effect
The rise of Software-as-a-Service (SaaS) and cloud are intertwined. The early SaaS era, from the late 1990s to 2007, proved customers were ready to abandon managing their own applications on-premises for “as a service” alternatives. Salesforce.com is the favorite example here. But, these first-generation SaaS companies had to manage their own hosting infrastructure under great burden and complexity.
In 2007 the modern cloud era began with Amazon Web Services’ (AWS) initial storage and compute offerings. Soon new SaaS projects (let’s call these second-generation) were launching on AWS (and later Microsoft Azure and Google Cloud Platform) instead of building their own hosting data centers. Unshackling organizations from managing hardware and physical infrastructure, the cloud unleashed a “Cambrian” explosion of creative experimentation in all aspects of enterprise IT and scientific research. Beyond email, CRM, SFA, and HRIS, other disciplines such as medical research, astronomy, manufacturing, healthcare, and finance experienced significant advances.
SaaS and the cloud have transformed how companies manage data and run their businesses.
These two tech mega-trends were adopted slowly at first (mainly by smaller companies that were more cost-sensitive and less risk-averse than their enterprise counterparts), but these technologies are now well-accepted parts of the business and consumer landscape.
SaaS and the cloud provide businesses with greater choice by freeing them from vendor lock-in, as well as enabling companies to buy nearly every IT service in a monthly pay-as-you-go fashion. Data portability is even easier now with the adoption of common APIs and file formats. SaaS vendors work harder to keep their customers happy because there is more competition and switching costs are low. This is all to benefit the customer.
The virtuous circle created by the cloud’s ever-lower-costs pricing model and rising innovation in this environment has meant that any company or project that requires massive amounts of compute power on-demand can now get it and at more affordable rates than the old model of compute being paid to be “always on.”
Waves of Innovation
But the cloud is not simply a wave of innovation in and of itself; it has paved the way for subsequent waves to follow, which would not have been possible without it. The cloud has unlocked epiphanies we couldn’t have imagined just a few years ago. Exponential innovation is the cloud industry’s guiding principle. It has made this processing power, which so many companies and vendors rely on for their innovations, accessible and flexible to their needs. This “ripple effect” of the cloud has led to the rise of several subsequent waves of innovation:
- Serverless — Many of the newest SaaS and mobile applications are built on the serverless approach, meaning that operating costs are lower than ever, as the compute expense directly correlates to application usage. There is no wasted infrastructure as only what is needed is used (or indeed paid for). Serverless will ripple through the cloud ecosystem, upend current vendors, and create opportunities for new startups to solve the problems of the day. The serverless approach is more disruptive in the cloud or containers like Docker, but it could only have been made possible because of the advent of acceptance of the cloud.
- SaaS management platforms — These platforms provide the tools organizations need to help them make the cloud work for them and suit their unique needs in the market. Companies like BetterCloud, Zilo, and MetaSaaS are getting better market share by providing such tools and recommending best practices for managing and implementing them. New companies are emerging to address this need as well, resulting in an entire industry that exists because of the cloud.
- No-code/low-code development — The accessibility provided by cloud tools has helped create an environment in which non-technical business employees can build apps on their own — otherwise known as “citizen developers.” The democratization of coding has allowed teams to create new applications and build their own stack to suit their needs without relying on outside vendors to create applications or their own IT departments to approve their purchase. The open-source platform Drupal is a good example of this type of innovation. Technologies can be easily assembled in building-block fashion utilizing the modules designed for various applications that the Drupal open source community (one of the largest in the world) creates to power companies’ needs for things like content, community, and commerce. These applications can be assembled and customized quickly by non-technical teams and without the need to be coded from scratch.
- The transformation of the IT department itself — In response to their waning influence within many organizations as a result of factors such as the no-code/low-code development mentioned above, IT is in the process of reinventing itself. IT departments will become increasingly smaller and more efficient as they evolve to focus more on business needs and less on mundane technical tasks. “Innovation” will replace “Information” in the CIO’s title, meaning that department’s strengths will lie in ensuring companies make good choices in support of state-of-the-art, trusted security controls; the introduction and enforcement of new standards such as multifactor authentication; and providing value-added services on top of the apps used by the modern enterprise.
These are just a few of the “ripple effects” of the world’s embrace of the cloud with many more soon to follow, and we can only speculate at what ripples some of these effects may create on their own.