The enterprise cloud, well on its way to becoming the greatest growth market in the history of business technology, this year became the primary engine of digital transformation across industries and around the globe as businesses fully embraced all three layers of the cloud—IaaS, PaaS and SaaS—for mission-critical operations.
Looking ahead, you can see where I think the cloud business will be going in 2019 by reading my new “Outlook 2019” piece through this link.
But to understand the forces behind the exciting developments to come, let’s take a look at the 10 biggest stories in the cloud business in 2018.
1. Microsoft Roars Past Amazon to Become #1 in Cloud Wars Top 10.
While Amazon is mistakenly portrayed as the runaway leader in the cloud, the truth is Microsoft’s cloud business is bigger than Amazon’s, it’s more wide-ranging and strategic than Amazon’s, and it’s growing faster than Amazon’s. I’m a big fan of Amazon and its superb execution, aggressive expansion and superb branding—but Microsoft’s cloud extends broadly and deeply into PaaS and SaaS; its positioning of “intelligent cloud to intelligent edge” has been brilliant; and the company’s massive partner ecosystem operates as a powerful force-multiplier.
2. Amazon Stuns Industry by Ripping and Replacing Oracle Database.
Now having said that about where things currently stand, I considered long and hard about making this the #1 story for the year. Within the past couple of years, Oracle founder Larry Ellison has taunted Amazon pointedly and aggressively about not having the technological chops to use its own database products to run the sprawling Amazon business. All of that has changed since Amazon’s stunning announcement last month that it has moved almost all of its data warehouse and database operations off of Oracle and onto Amazon’s own technology and will complete the transition in the coming year. If that cutover goes smoothly, then Amazon can begin marketing its data-management solutions as part of a bigger and higher-value suite of cloud services.
3. Hybrid Computing Takes Hold as Standard Strategy for Cloud Industry.
Part of the cloud industry’s maturation is the shift in focus away from its own technology and terminology and toward a new orientation centered on what business customers want and need. Nowhere has this been more apparent than with the hybrid cloud, specifically designed to allow businesses to gracefully interlace new cloud services and technology with existing on-premises technologies. And this creates a big opportunity for the so-called “legacy” companies that have decades of on-premises experience to elegantly interweave the old and the new to align with the requirements of business customers. Microsoft, SAP, IBM and Oracle all made huge moves in 2018 to grab leadership positions in the hybrid space, and every enterprise-cloud player will need to make its hybrid case in the coming year.
4. AI and ML Disrupt Industries, Accelerate the Digital Future.
While everyone knew the AI impact would be big—and it certainly has been—the strikingly rapid emergence of Machine Learning as a wildly disruptive and high-value technology has been something of a shocker. Every cloud player made AI and ML top-priority issues in 2018, and it will be great fun to watch the fruits of those labors drive waves of innovation and growth in the coming year.
5. IBM Buys Red Hat—and new Vitality—as an Open-Computing Giant.
IBM’s cloud revenue for calendar 2018 has a good chance to reach $20 billion, and that’s before the inclusion of its proposed acquisition of Red Hat. So IBM’s vast scale and deep-enterprise technical expertise dovetail perfectly with Red Hat’s modern cloud tools and technologies, particularly since both companies have long been committed to open computing and fully open cloud technologies. And IBM CEO Ginni Rometty pointed out a huge asset Red Hat will bring to the deal: the affiliation of 8 million developers currently committed to the Red Hat ecosystem.
6. Google Cloud Names Thomas Kurian CEO and puts more focus on SaaS.
Continuing to position itself as a full-service cloud provider—witness the move in 2018 away from the former name of Google Cloud Platform—Google Cloud made a brilliant hire in November by making former Oracle product chief Thomas Kurian its CEO. Over the past 15 years, Kurian has been as deeply immersed as any executive in the world in not only cloud R&D but also strategic customer discussions, and that fully balanced perspective will be enormously valuable at Google Cloud, particularly as it gets more aggressive in using G-Suite as an onramp to its full set of cloud services.
7. Enterprise-Cloud Growth Remains Incredibly Strong as Engine of Digital Business.
With the two largest and most-influential cloud vendors—#1 Microsoft and #2 Amazon—generating growth in their cloud businesses of more than 40% even as those businesses scale toward annualized totals of more than $30 billion, the entire sector has been posting stellar growth quarter after quarter. Salesforce is rolling along with growth topping 25% or more on its way to about $16 billion in revenue for calendar 2019, while ServiceNow and Workday—each closing in on $3 billion in revenue for calendar 2019—have been growing at more than 30% each quarter. SAP’s $6-billion cloud business has been expanding at 30% or better and is accelerating, IBM’s cloud revenue will pick up nicely with the addition of RedHat, and while Oracle’s cloud-revenue growth has slowed over the past few quarters, it too is likely to sustain 20% growth in the coming year. Throughout 2018, every one of those top cloud vendors poured massive investments into their cloud businesses, will no doubt be even more aggressive in 2019 as market continues to expand dramatically as businesses fully acknowledge that the cloud is by far their best path to becoming end-to-end digital enterprises.
8. The Developer Imperative: Digital Talent Becomes a Boardroom Priority.
Yes, it’s become a bit trite to say that “every company is a software company,” but in 2018 that rosy sentiment started out as more promise than reality for most companies. Throughout the year, though, as every C-level executive and many boards began to recognize that truly digital enterprises need massive infusions of digital talent—particularly developers—the market for creative coders and business-minded developers heated up to unprecedented levels. And the end of that bull market for developer talent is nowhere in sight.
9. SAP Shakes Up The Enterprise-Apps Market with Bold New Moves in SaaS.
First it announced a sweeping initiative early in the year to redefine the CRM business by linking ERP insights with customer engagements, and then in October SAP went where no other major apps company has ever gone before by acquiring an “experience management” company—Qualtrics—to finally and formally fulfill CEO Bill McDermott’s dream of interconnecting the supply chain with the demand chain. It’s not just ironic but highly impressive that it was the world’s most iconic enterprise-software company—SAP—that orchestrated the overhaul of how the modern enterprise-software market is structured.
10. Microsoft Scores Big Retail Wins, Adds Innovation Venture with Walmart.
As Microsoft began cranking up attacks on Amazon for competing in the retail business against companies AWS was trying to sell to, Satya Nadella’s team formed an unprecedented strategic partnership with Walmart to not only expand the use of the Azure cloud more broadly across the retail giant, but also develop a co-innovation lab in Austin, Texas. Walmart hopes to gain additional insights into ways to accelerate and deepen its digital transformation, and Microsoft will gain extremely valuable insights into how to serve the fast-changing retail industry more effectively.
RECOMMENDED READING FROM CLOUD WARS:
The World’s Top 5 Cloud-Computing Suppliers: #1 Microsoft, #2 Amazon, #3 Salesforce, #4 SAP, #5 IBM
Amazon Versus Oracle: The Battle for Cloud Database Leadership
As Amazon Battles with Retailers, Microsoft Leads Them into the Cloud
Why Microsoft Is #1 in the Cloud: 10 Key Insights
SAP’s Stunning Transformation: Qualtrics Already “Crown Jewel of Company”
Watch Out, Microsoft and Amazon: Google Cloud CEO Thomas Kurian Plans To Be #1
The Coming Hybrid Wave: Where Do Microsoft, IBM and Amazon Stand? (Part 1 of 2)
Oracle, SAP and Workday Driving Red-Hot Cloud ERP Growth Into 2019
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