5 Cloud Wars Predictions for Next 6 Months: M&A, Alliances, and Other Accelerators

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On this first day of the second half of 2019, here are five predictions for big trends that will continue to rock and roil the tech industry as its major players compete savagely in what is becoming one of the greatest growth markets of all time. 

1. More M&A to Meet Customer Demand for Hybrid Cloud and Multi-Cloud.

It’s looking like IBM’s $33-billion acquisition of Red Hat will soon get full approvals from around the globe. And the recent announcements of Google Cloud acquiring Looker and of Salesforce buying Tableau will be just the beginning in what I expect to be a busy second half of the year for M&A. (Please see Why Google Cloud and Salesforce Are Pumping $18 Billion into Analytics and BI.)

Internal development will continue to accelerate among all the major players, but the cloud industry is seeing such huge demand from customers that the top vendors are aggressively looking to plug in gaps in their portfolios. 

That’s also a factor of customers deciding—quite wisely—that they want to do fewer big integration products, preferring to have the vendor community optimize their moves into multi-cloud and hybrid cloud architectures and capabilities. 

Watch for the big players to pick off some small and midsize cloud companies that can help them in those areas.

2. More Alliances to Accelerate and Simplify Customer Journeys to the Cloud.

I know I’ve talked about this a fair amount in the past few weeks, but the significance of the Microsoft-Oracle “cloud interconnect” alliance simply cannot be overstated. 

Think about it: these are two of the world’s largest and most-influential tech firms. Both play at all three layers of the cloud and thereby will be competing against each other broadly and deeply. Yet the two have nevertheless agreed to put customer interests way ahead of competitive bravado. (You can read all about it at Microsoft-Oracle Shocker: Customers Win as #1 and #6 Vendors Pair Up.)

Does it make perfect sense? Sure it does—but we all know that common sense sometimes falls into short supply when intense competition and one of the largest addressable markets the tech business has ever seen are at play.

And in a still-maturing business like the cloud, the inside-the-industry focus can be hard to shake. And that often results in customers feeling that they’re not exactly the top priority for the cloud vendors.

Microsoft has been the primary driver for putting customer interests above competitive dynamics. (That’s one of the primary reasons Satya Nadella and company have a hammer-lock on the #1 spot in my Cloud Wars Top 10 rankings.)

And now Oracle—Oracle!!—has also jumped aboard the customer-first bullet-train. Other vendors are soon going to realize that while the enemy of their enemy might be their friend and all that, they’d damn well better be sure that the priorities of their customers are their fondest BFF of all. (For more on this, please see Grading the World’s Top 10 Cloud Vendors: The Cloud Wars Report Card.)

3. More Focus on Customer Experience.

From SAP’s industry-shaking acquisition of Qualtrics to Salesforce’s recent inclusion of “customer experience” within CRM to Thomas Kurian’s re-orienting Google Cloud around a customer-first outlook, the whole “customer experience” thing has surged to top of the priority list.

In large part, that’s because outside of the tech world, CEOs of companies in every imaginable industry are making “customer experience” their primary mission and focus. The big value businesses offer today is no longer just the products they make and the services they offer. Rather, they deliver customers experiences, with and around those products and services.

Accordingly, the Cloud Wars have erupted with CX fever. SAP CEO Bill McDermott has gone so far as to christen this new world “the experience economy.” The leaders of Microsoft, Salesforce, SAP, Google Cloud, Workday, Accenture and ServiceNow also speak passionately and incessantly about the primacy of the customer experience. Look for that capability to take on greater and greater significance with them as well as with the rest of the vendors in the Cloud Wars Top 10 in the second half of 2019.

Predictions for the Cloud Wars top 10
4. More Tangible Solutions for Customers Around Data and its Strategic Value.

Almost 200 years ago, in “Rime of the Ancient Mariner,” the poet Samuel Taylor Coleridge penned the famous line, “Water, water everywhere//Nor any a drop to drink.” And for the what seems like the past 100 years, businesses have become increasingly swamped by data but haven’t been able to effectively make good use of it.

Every company in the Cloud Wars Top 10 offers various types of “data solutions.” But viewed from the perspective of business customers, those solutions are often so limited or specialized and fragmented and incompatible that they amount to a big frosty pitcher of salt water offered up to parched mariners.

A couple of the acquisitions noted above should help a great deal. Because not only will they give Google Cloud (Looker) and Salesforce (Tableau) powerful new capabilities, they also are giving the other top cloud players enormous incentive to transform their wide-ranging, sophisticated and often fragmented data technologies into customer-centered suites of data solutions. (Please see Arms Race in the Cloud: Google, IBM, Salesforce, SAP Lock In on Data and also How Oracle Is Becoming a Cloud Powerhouse: Larry Ellison’s All-In Bet on Autonomous Database.)

Anything less will simply not measure up as the global digital economy takes hold.

5. Cybersecurity Must Become a Superstar, Not a Role Player.

Few issues strike dread more deeply into the hearts of customers than cybersecurity in the digital age. And few of the companies in the Cloud Wars Top 10 do an even decent job of trying to alleviate those concerns for a business-centered and end-to-end perspective.

Instead, a lot of the big tech vendors throw in a requisite slide at the end of a presentation saying something like, “Cybersecurity? Absolutely—we’ve met or exceeded all of the industry certifications, including WHIZBNG 806.27, GEEK-SPK 9876, and HOOGIVZADAM 123.”

It’s high time for the cloud industry to articulate cybersecurity in the voice and language of business customers, and of business strategy—the way it’s discussed in boardrooms, not in software-development labs. 

And as the already fast-paced world of the cloud accelerates more vigorously into the second half of 2019, I predict that the cloud vendor that can market its cybersecurity abilities as strategic business tools that not only mitigate threats but also help drive revenue and enhance customer experiences will experience some major wins in the Cloud Wars.


Disclosure: at the time of this writing, Microsoft, SAP, Oracle, and Google Cloud were clients of Evans Strategic Communications LLC.


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