Will Companies Drag Their Feet On The Way To The SaaS Cloud?

Software as a service is all the rage. But not all companies are rushing towards cloud computing. Some can’t even take advantage of cloud services because of legal or client confidentiality concerns. “Microsoft gets that Windows is done. But it’s betting companies will drag heels on way to the cloud.” is worth a read.

Not only is Microsoft positioned to weather a downturn in new Windows deployments, it will thrive in the long run because the company realizes that most customers will move slowly to the cloud. That’s right: enterprises aren’t quite as ready to embrace the cloud as blindly as all the froth around companies like Workday and Google and Salesforce suggests.

It’s time to stop obsessing about the growth rates of Software-as-a-Service (SaaS) companies that are still a rounding error for IBM and Oracle and Microsoft, and temper the apparently foregone conclusion that on-premises software is all but dead.IDC predicts that by 2016 $1 out of every $5 spent on software will be on a cloud model. In case that’s not clear enough: Only 20% of software revenue will be cloud based . . . three freaking years from now! There’s data behind that prediction, and most CIOs won’t find fault with it.

Sure, there’s tremendous promise, but enterprises want the flexibility to keep some applications and business processes on premises, with an eye, and an occasional shift toward the cloud. Technology providers that can promise a seamless transition and flexibility will win. Microsoft’s recent moves indicate that it gets the point.

When you add in the rapid rise of Windows Azure to a 20% share of the cloud computing market with $1 billion+ in sales, when it is up against Amazon Web Services, this is an interesting problem to think about.

While SaaS gets all of the media attention, companies doing less sexy stuff in the technology space can deliver substantial revenue growth in enterprise focused channels like servers and virtualisation. The cloud is an easier sell for PR managers at SaaS firms obsessed with growth at all costs.