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Ten Cloud Computing Predictions for 2009 - From Appirio

Predicts strong growth for cloud computing, Azure disappointment, SaaS 1.0 failure and increased cloud connections

As the year draws to a close, many companies are left wondering what next year will bring for this year's hottest technology trend - cloud computing. To answer these questions, Appirio today released its top 10 predictions for how cloud computing will evolve in 2009 and the impact those trends will have on IT and business.

Appirio's predictions reveal that in spite of our current economy, cloud computing will continue to see strong growth and investment over the next year - a prediction that industry analysts agree with as well. As more and more companies like Flextronics, Genentech and Harrah's publicly discuss their experience with cloud computing, it will pave the way for even more adoption over the coming year.

"This year cloud computing made the leap from an interesting proposition to a viable option for even the largest of enterprises. In 2009 it becomes mandatory," said Appirio co-founder, Narinder Singh. "Today's economic climate will force enterprises to pick technology winners and losers for their environment in order to cut costs, be more efficient and deliver business-relevant innovation. Cloud computing makes this seemingly impossible task a possibility - much more so than with traditional software. This is why we believe cloud computing will be counter cyclical, with SaaS and Platform as a Service (PaaS) investment accelerating, and traditional software spending declining."

Appirio's 2009 predictions include:

1. The "cloud of clouds" expands but sees traction revolve around open platforms. Expect to see Microsoft and other traditional software players invest even more in new but closed cloud platforms. At the same time, proponents of a more open approach, like Amazon, Facebook, Google and Salesforce, will push more and deeper "cloud connections" like they did this year. This will create a more heated debate between the value of closed versus federated platforms.

2. At best, Microsoft Azure will be a better platform for Exchange. Microsoft will continue to shower attention on Azure but will see relatively limited adoption from ISVs and customers. While it will likely disappoint users and remain well behind established cloud players for the first few years, it will become a viable platform by 2010 - primarily as a better foundation for Microsoft Exchange and existing on-premise .NET applications.

3. Google doubles down on the enterprise; enterprises return the favor by racing to Google Apps. Google has already shown they're serious about winning over enterprises with acquisitions like Postini and investments in Google Apps. They'll continue to expand their support for enterprise-class security, transparency, and development languages. In return enterprise customers, faced with economics that overcome preconceptions, will substantially increase their pace of adoption. We expect to see at least 3X the number of enterprises evaluating and moving to Google Apps, at the direct expense of Microsoft Exchange, Office and Lotus Notes (the Asbestos of Software).

4. A major SaaS 1.0 company will fail. Although SaaS and cloud investments will increase next year, a number of SaaS 1.0 companies - stand-alone companies who built their SaaS products from scratch on their own - will either falter due to the demands of creating infrastructure, or chose to re-platform. The progress of enterprise-ready platforms like Force.com makes it much easier for SaaS 2.0 companies to build advanced products that can leap ahead of the competition at a much lower cost.

5. A rise in serverless companies with 1000+ employees. In 2009, the market will start to hear about more and more companies going completely server-less. While this is already happening at smaller companies, larger and larger companies will optimize their business processes and cut IT expenses by outsourcing to cloud providers.

6. The rise and fall of the private cloud. While private clouds will continue to generate a significant amount of hype, customers in most cases will realize they are little more than a better data center implementation. They will be valuable for customers who have significant transaction volumes and stringent regulatory or security requirements, but will have little ROI for the average IT organization. In the end, private clouds will create more value for service providers than for customers.

7. Business Intelligence (BI) becomes the next functional area to SaaSify. Just as CRM and HRM applications became poster children for the shift to SaaS these last few years, we'll see the same thing happening with on-demand BI. We'll also see a bifurcation in this space, with one set of applications built from the ground up to leverage the inherent benefits of cloud computing and one set a repackaging of traditional BI features just delivered over the Internet.

8. SAP or Oracle gets into the PaaS game. While these companies may have hedged their bets in 2008 (or even berated the SaaS model), we believe one of these companies will see the writing on the wall and start at least talking about a new cloud platform they're building over the next few years. In fact, they will attempt to switch the conversation and convince the market they have been working on this for years but called it something different.

9. Enterprises will figure out how to use social networks in the right way. Companies - especially their HR and marketing organizations - will finally figure out how to utilize social networks in day-to-day operations. More and more business (employees, leads, market intelligence) will come directly through business applications that tap into Facebook, Twitter, LinkedIn and other social networks that are already being used by employees and customers outside the workplace.

10. There will be at least one $100M software product built on Force.com. The myth that it is impossible to build a big business on an on-demand platform will finally be debunked by the emergence of a PaaS-enabled application in 2009 that has the potential for a $100M run rate.

These predictions are loosely based on what Appirio is hearing and seeing first hand from industry insiders around the globe - from a base of over 2,000 customers, partnerships with leaders in this space, and conversations with industry influencers.

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