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Gartner: Are the real cloud wars about to begin?

In 2017, the big cloud providers were focused on competing on infrastructure as a service, but the shift to platforms is shaking up the market

Back in 2017, I discussed Oracle’s cloud strategy and how it was failing to win the cloud infrastructure war among its competitors (namely, Amazon and Google). Three years later, we are now looking at the new cloud wars between SAP, Microsoft and Google as the latter two diversify their offering to customers. 

As a result, comparing these suppliers is complicated. Where some excel at compute/hardware, some outclass specific business process design, and others are best at insight and decision-making support, so you need to ask yourself which is most important to whom, and why.

Towards the end of 2017, a client asked me a question about the cloud. He said: “If I had a choice, why would I build anything, if I can get it in the cloud?” It was a fair question to ask, but I’d argue that it wasn’t necessarily the right one. 

In this company, I saw huge potential to drive greater return on investment (ROI) by sharing data between divisions regarding such things as common customers for up-selling and cross-selling products and services, product data for better leverage and support, and global suppliers to help rationalise business spend.

I wanted to convey to the client the importance of data and analytics and how they could be used to best leverage this potential. However, as we discussed the various methods, processes and technologies that would help, the client brought up the cloud question.

Winners and losers

The question stemmed from the topical belief at the time that Amazon and Google had already “won” the cloud war and that any technology the client may want, or ever need, ought to be on the cloud, where those companies were the default providers.

What was unclear, however, was what the “cloud” actually was. For example, did Amazon really sell more cloud compute infrastructure than every other supplier? Infrastructure as a service (IaaS) is not enterprise resource planning (ERP). The former is what IT uses to run its business; the latter is what businesses use to run their business – a distinction the client was not clear on. 

At the time, I put together a framework for the client that summarised the key differences in software as a service (SaaS), platform as a service (PaaS), IaaS and data as a service (DaaS), as follows:

  • SaaS should be seen as standard business procedures as a service.
  • PaaS should be seen as a form of innovation or differentiation as a service.
  • IaaS should be seen as performance as a service.
  • DaaS should be seen as insight as a service.

This framework aimed to explain what cloud really meant, what it was offering at the time, and perhaps predict where we might land in the future. For example, most clients assumed that “cloud” equated to IaaS. Can you remember articles from a year or two back stating that Amazon was leading cloud growth? 

This was, and is, a gross over-simplification. Amazon does very well in the infrastructure component of the cloud, but that was never the whole story. IaaS doesn’t help towards business productivity because it doesn’t change the way a business behaves. 

The battle in 2017 was an infrastructure battle and, in some ways, a phoney war before the real cloud war broke out. 

Where are we now?

The real cloud war I predicted then would only break out when solutions, offered via the cloud, could support business innovation and business differentiation – when cloud solutions could drive business benefit directly and not simply benefits to IT. 

For that to happen, the focus needed to be on what a business does and how it operates, not what IT does and how it operates. This might seem like a small point, but in the overall scheme of things, in the overall war, I think this is a massive point.

IaaS is a well-known battlefield but is not where the cloud war of today lies. PaaS and SaaS have grown in importance over the last two years and could be seen as more important than IaaS to the business. DaaS, which was barely discussed two years ago, has also seen its lion’s share of the stack increase. 

So yes, IaaS is important if what you are looking for exists in a cloud environment. But the question of what aspect of cloud is most important to you, and what your real options are, is much more complicated than simply thinking Amazon “won” the cloud war years ago.

That battle in 2017 was around the infrastructure. At the time, Oracle was not really messaging effectively to its prospects – it was trying to out-punch its larger competitors that had a bigger hold on compute. What Oracle was not really doing was messaging to the CEO.

Read more about the cloud market

  • Oracle may be late to the cloud infrastructure and platform game, but it believes it has what it takes to carve out a bigger slice of the Asia-Pacific’s cloud market.
  • With so many SAP products using the term ‘cloud’, understanding what Cloud Platform is – and isn’t – can be confusing. Here’s a quick intro to help bring clarity to the issue.

Today, infrastructure is no longer king and, as SAP CEO Christian Klein recently outlined, CEOs are beginning to see the value in ERP systems when it comes to digital transformation and innovation. Klein said: “More and more of those customers are choosing to go with SAP ERP and related applications in the cloud, giving SAP a huge advantage over arch-rival Oracle in cloud-ERP customers.”

Klein now predicts increasing competition with Microsoft and Google, which have moved into applications, whereas they previously focused on making the hardware alone while SAP, for example, made the applications. Amazon, which as we know was seen to have “won” the cloud war just two years ago, does not currently offer both.  

The cloud war of today is more complex, as the likes of SAP compete with IaaS providers who are pushing for a bigger piece of the pie. It is yet to be seen whether this bid from Microsoft and Google will pay off to the detriment of their competitors, specifically Amazon, which is yet to venture into enterprise applications, or companies like SAP and Oracle, which are finding themselves in competition with their former partners.

It is fair to say the real cloud wars might just be getting started.

Andrew White is a Gartner distinguished analyst and vice-president. His primary research focus is on the chief data officer role, data and analytics platforms, strategy and operating models, governance, and stewardship.

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