Cloudy with a Chance of $$$$
Software is feeding the software world — part 2
Most enterprises have moved to the cloud. As per reports by industry analysts more than 60% of the enterprises are now using at least one cloud providers in the US. Many use multiple cloud providers. They also use many applications via Software as a Service (SaaS) providers such as Salesforce, Workday, ServiceNow and several others.
SaaS companies require compute, storage, database and networking to build their software. The giants starting with Amazon laid the foundation of web services that can be used as building blocks to build upon.
For example, Adobe is one of the largest software companies, publisher of Photoshop and several creative tools. When they decided to offer their software as a service with recurring revenue, they chose to base it on Amazon Web Services. So did the several others. Some of the largest publicly traded SaaS providers (listed in BVP CloudIndex) with multi billion dollar market cap run on AWS including Workday, Etsy, Atlassian, Hubspot and more. Most of these are digital native businesses.
Shopify, a competitor of Amazon, is based on Microsoft Azure along with Zoom who in turn competes with Microsoft’s Teams product. LinkedIn started on Amazon Web Services and one of its largest customers when Microsoft acquired them for $27Billion and it took 3 years to migrate to Microsoft’s own Azure Services. Microsoft has other big name partners such as SAP.
Google has some large companies such as Verizon on their cloud. It is believed that iiCloud, one of the largest free file sharing services with over 300Million+ users maybe on Google cloud, though they started on Microsoft Azure Services. None of the companies confirm this.
As we go down from public companies to privately held, venture backed companies with millions of $ in revenues. We start with the Unicorns from Techcrunch’s leaderboard. Several unicorns have had their start on one of the cloud providers. Stripe, the online payment system started off on AWS. Databricks, an AI platform, claims to be a partner with all major cloud providers to deploy their services.
The graphs below show the market share and revenue growth in AWS and Azure. Covid-19 accelerated the migration to the clouds.
Market share of Clouds
Quarterly revenue growth of AWS from 2014 to most recent 2022
Quarterly revenue growth of Microsoft Azure from 2015 to most recent 2022
As you go down the cloud, Salesforce Cloud has a surprising larger chunk. It may have something to do with Veeva, with revenues topping $1.7+ Billion, started as a CRM specific for life sciences on Salesforce configuration and modifications.
Building blocks — Identity and APIs
One essential service used by all applications is authentication frameworks. This is similar to the gates and doors on all buildings. Okta is a poster child for the service. Its growth is directly related to the number of applications relying on its single signon programs including the integrations in the enterprise.
Apart from Identity, some other software companies provide application programming interfaces (API) which are commonly used. Consider these as utilities required at home. One such utility company is Twliio, that provides programmable communication tools for making and receiving phone calls, sending and receiving text messages, and performing other communication functions using its web service APIs. One of their early go to market strategy was by encouraging developers at hackathons to use their APIs for faster deployments. They have multiplied their revenues by several folds since then.
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