A new form of computing, already gaining popularity among the masses, now has business credibility with SAP’s $3.4 billion takeover of SuccessFactors. Cloud computing just got interesting.
Pundits love to declare inflection points. Stock analysts hurry to be the first to call the bottom of a bear market or the height of a bull run. Industry watchers throw darts at moving targets such as peak oil and housing bubbles. It’s inherently shaky ground.
Yet sometimes the evidence simplifies the task. This weekend we saw the evidence that cloud computing has reached its inflection point. SAP announced on Saturday that it will buy SuccessFactors for $3.4 billion, a hearty premium on the company’s most recent valuation. SuccessFactors sells software that covers various HR functions and delivers its products on a cloud computing model. Oracle made a similar move in October, announcing that it will buy cloud-based RightNow Technologies and its CRM-focused offerings for $1.43 billion.
The not-so-new concept of cloud computing already had street cred, with the likes of Salesforce.com, Google, and Apple helping to shift perceptions, and millions of consumers using the cloud to power their digital lives. But now, the titans have moved in. Now cloud computing has establishment cred. And establishment cred moves markets.
Forget what you’ve heard about the consumerization of IT powering the shift to cloud computing. That wave wasn’t going to wash cloud computing onto corporate shores, even if it did push the high-tide mark a bit. CFOs and CTOs needed a benediction from the IT establishment before they could fully incorporate cloud computing into their IT plans. SAP and Oracle just unsheathed their ceremonial sword and tapped it against cloud computing’s broad shoulders.
Of course, pundits being pundits, some will say the inflection predated these moves. They will say that SAP embraced cloud computing when it released its SaaS ERP product Business ByDesign last year. But Business ByDesign revenue is still a rounding error on SAP’s balance sheet. It was Walldorf’s way of testing the water, not a full-scale effort to alter its flow. Ditto for the cloud-based point solutions both SAP and Oracle have offered for things like sales-force automation and business reporting.
It took a $3.4 billion acquisition to confirm that cloud computing will loom ever larger in the world of business IT.
What about you: When do you think the inflection point came for cloud computing?
One Comment
These acquisitions are without doubt a step in the right direction for the popularization of cloud computing, but I can’t help but wonder if it will derail the reputation Apple, Salesforce.com and others have so carefully built for the concept of cloud computing.
Unleashing the “big dogs” is not always a win for technology and I’d hate to see the elegance and thoughtfulness of platforms produced by the leaders in the Cloud space forgotten if these 2 ginormous players come in with a less than stellar approach.
The idea that CFOs and CTOs have been sitting back just waiting for a powerhouse in the industry to make it “ok” to get on the cloud computing band wagon is unsettling to say the least. Organizations need to make their own decisions, not wait for industry giants to bless a new concept with buyouts of existing companies.
Maybe this is the inflection point for cloud computing – I’m not sure anyone can say this early. I just hope they bring powerful, positive additions – not poor user experiences to the table.
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