{"id":3633,"date":"2013-04-09T07:00:30","date_gmt":"2013-04-09T15:00:30","guid":{"rendered":"http:\/\/www.formtek.com\/blog\/?p=3633"},"modified":"2013-04-09T07:00:30","modified_gmt":"2013-04-09T15:00:30","slug":"saas-and-the-cloud-a-contrarian-voice-questioning-the-hype","status":"publish","type":"post","link":"https:\/\/formtek.com\/blog\/saas-and-the-cloud-a-contrarian-voice-questioning-the-hype\/","title":{"rendered":"SaaS and the Cloud: A Contrarian Voice Questioning the Hype"},"content":{"rendered":"

While cloud computing may be delivering on it’s promises to users of the technology, things may not be as rosy for the vendors that are providing the services.<\/p>\n

Anthony Miller<\/a>, analyst at TechMarketView, is one such contrarian. \u00a0It’s not that he’s not a believer in the many benefits that the cloud offers businesses, it’s that he thinks that cloud technology will be a blow to technology vendors.<\/p>\n

Miller questions, for example,\u00a0figures from other analysts like IDC<\/a> that say that the Cloud will be an engine for job creation and growth for IT, creating as many as 14 million jobs. \u00a0Miller says that the very nature of cloud services is all about reducing expenses and cutting back, and that any effect of the cloud on IT will actually be ‘deflationary’. \u00a0Miller\u00a0said that<\/a> “Our own forecasts for the UK market suggest that spending on software and IT services will decline in real terms (i.e. excluding inflation) until 2015 and then will remain pretty much flat (plus or minus) till the end of the decade.”<\/p>\n

What will the effect be on technology vendors? \u00a0Miller says that the problem with SaaS is the last ‘S’ — ‘Service’. \u00a0Up until the cloud, vendors only needed to build their software, now they also need to host and handhold it. \u00a0Delivering software in that way is simply more expensive than just shipping it on a disk. \u00a0Yet vendors are charging less for it. \u00a0Miller especially questions the rationale behind the pricing of SaaS options. \u00a0He says that “Flexibility should come at a premium, not a discount.” \u00a0He points to cloud-vendor star Salesforce.com. \u00a0Salesforce continues to lose buckets of money<\/a>, despite their rising revenues.<\/p>\n

Miller\u00a0said that <\/a>“The underlying factor is that cloud computing, just like every other major technology trend in the market, is designed to lower the cost of computing for organizations, whether they are private sector enterprises or public sector bodies. So, not surprisingly, as organisations look for ways to cut costs, going to the cloud is one of the things they are looking at… \u00a0But suppliers need to be aware of the cost of delivering the service, because if the cost doesn\u2019t change and the revenue comes down, that will hit profit margins.”<\/p>\n

In an interview with TechWeek Europe, Miller said that<\/a> “We are in our sixth consecutive year of market decline \u2013 and the IT market will continue to grow more slowly than gross domestic product (GDP) till the end of the decade, and probably indefinitely.” \u00a0To Miller, within IT, only the outlook for mobile seems promising. \u00a0“Mobile is breaking the mould: it\u2019s the biggest disruptive force we have ever seen in the technology sector.”<\/p>\n

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While cloud computing may be delivering on it’s promises to users of the technology, things may not be as rosy for the vendors that are providing the services. Anthony Miller, analyst at TechMarketView, is one such contrarian. \u00a0It’s not that…<\/span><\/p>\n

Read more ›<\/a><\/div>\n

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