Cloud adoption has continued to grow for the last two years to the point where it is now “affecting the climate of every software company. As more and more enterprises give up license-based software in favor of faster, more convenient cloud services, the software industry itself is changing dramatically. Although legacy software companies that have moved into the cloud are reaping the benefits of the growing “as-a-service” ecosystem, they are also facing some risks.
According to a recent report from the advisory firm PwC (formerly known as Pricewaterhouse Coopers), the revenues for the top 100 cloud companies rose by 10 percent between 2012 and 2014, from $247.5 billion to $272.2 billion. The top five companies providing cloud services globally were, in order, Microsoft, Oracle, IBM, SAP and Symantec.
In addition to having to watch their backs for new competitors, cloud services leaders must also pay increased attention to customer service because, “as software options proliferate, and switching costs diminish, support becomes more of a competitive differentiation. Such pressures represent a significant change from the way the software industry used to work.
With the cloud’s subscription-based model, software companies must make a greater effort to ensure customers use their offerings, gain value from them and have reasons to renew. As businesses increasingly turn to the cloud for mission-critical services, their expectations are also changing.
Enterprises looking for cloud services now know they have a wide range of applications and providers to choose from, with specialists in every possible application area. At the same time, many also continue to run their own applications on premises, which is driving a growing demand for hybrid cloud services and providers who can help connect multiple, disparate IT systems.