Is Cloud-First the Enterprise Version of Mobile-First?
I recently read in CIO Journal’s Morning Download that “for many companies, the cloud is still an adjunct to the data center, an option for less mission-critical applications. It’s a good bet that will start to change too, as IBM Corp., SAP and their peers become cloud-first technology companies.”
That got me thinking about the implications of enterprise software being developed and sold as cloud-first by legacy tech giants. Software companies like SAP are moving away from the historical perpetual license model, which had higher one-time upfront payments and annual maintenance fees, in favor of a subscription pricing model. Beyond sacrificing short term margins, the move to evolve their cloud computing offerings will likely have an impact on their end customers: large corporations in financial services, media, advertising, pharma, etc.
So what would happen if all enterprise software was developed and sold as cloud-first, the same way that consumer tech has largely gone mobile-first? In the consumer tech world this has had broad implications from influencing design, feature prioritization, and user experience decisions. Within the enterprise context, this potential shift carries with it several changes to IT which would require essentially a new baseline for off premise infrastructure:
Identity and entitlements will move beyond the active directory paradigm as we know it today. With HR tools like Workday Inc. already storing employee data in the cloud, I see tools like the open source OpenIDM –supported by Forgerock–gaining prominence and becoming the plumbing to enable a multitude of devices to connect to enterprise applications from anywhere with the right permissions. Much investment has already been made in the space–competitor Okta has raised $79M to date. But as these cloud identity platforms become standard for all enterprises, what’s next to be built on top of them to deliver further business value or operational efficiencies? Given that it is a natural extension of the Google Apps ecosystem, expect Google Inc. to do more here too as they continue to displace Microsoft Office and Exchange tools.
Security will take on many new meanings and be critical from the outset as a core requirement. This includes protecting and encrypting data with tools like CipherCloud, PerspecSys or Vaultive. But in this new cloud-first world, how do you define perimeters? How should policies be oriented and enforced? Taking this further, how can you protect the hardware itself from new threat vectors such as BIOS and firmware attacks to ensure your security and compliance needs are met? Companies like Trapezoid (a Work-Bench Ventures portfolio company) will be foundational layers in these new stacks in order to ensure trusted hardware connections are made with these servers and other devices outside of your physical premises and watchful eye.
API usage to connect cloud services with one another will be more commonplace in order to generate efficiencies from the portability of enterprise data. While tools like Layer 7 and Apigee have matured and gained significant traction over the last few years–Layer 7 was acquired by CA Technologies, and Apigee has raised a whopping $131M to date– I wonder what sort of efficiencies will be unleashed upon corporations once the majority of their data is living in the cloud? Potential applications which mashup historically siloed data can be created for industries to increase top lines in ways previously unattainable. The sheer ease of use of connecting cloud to cloud, vs. historically connecting on-prem to on-prem –through clunky integration tools–or on-prem to cloud will dramatically increase the ability to tinker with different datasets and see if new conclusions can be drawn to help their businesses.
This is just the beginning of a much longer conversation about how things will play out. How will the software development lifecycle change if we think of all development efforts being cloud-based vs. occurring on premise? Will this make the recently Series B funded Docker a must-have tool to automate deployment of applications in their self-contained Docker containers? Something else to consider is how regulated industries would adjust to this potential new paradigm, and what tools would need to be created to handle their audit, availability, data protection and other requirements? As we see startups and now legacy tech giants target enterprises with their new SaaS tools, it will be interesting to see what new business processes and data silos are moved online.
As founder of the NY Enterprise Technology Meetup, a monthly enterprise technology forum in NYC, and Venture Director at Work-Bench, I try to stay abreast of these changes. So if you have any feedback about my points, or any ideas of your own to share, please do so in the comments and feel free to tweet me at @fendien.
Jonathan Lehr is Venture Director at Work-Bench where he focuses on early stage enterprise technology investments. He previously worked at Morgan Stanley in IT and is the Founder of the NY Enterprise Technology Meetup.
