A few days ago, our friends at TechCrunch ran a post I wrote titled "The Coming Tornado: Cloud in the Enterprise." In it, I explain why cloud-based services will tip for large businesses over the next two years, unleashing a "tornado" of change in enterprise IT. Maturing platforms, increasingly web-savvy knowledge workers, and compelling pricing are all driving adoption of the cloud and with it, a new, more strategic role for IT. Security concerns and fears of of relinquishing control of data are the final major hurdles to mainstream business IT embracing cloud platforms.
Based on the ensuing comments, it's clear that this topic is hot one (at least to the TechCrunch audience). Some readers agree that the cloud is ripe for enterprise adoption, while others think I'm a little nuts to make such a claim. People on both sides of the argument made some very compelling, thoughtful points, a few of which are worth addressing in greater detail here (comments are paraphrased):
What about security and downtime? It's too risky for large corporations to relinquish their data.
Security and downtime are serious concerns whether you're dealing with the cloud or on-site services. But think about it this way: a cloud vendor's very existence hinges on its ability to protect data and have as little server downtime as possible - it's our primary competency. Whereas maintaining servers is just one of the many responsibilities of a typical IT department, it is absolutely integral to a cloud company's business. This isn't to say that businesses should just "trust" the cloud - transparency is essential and there are certifications audited by third parties that detail how a SaaS provider is keeping data secure. Many large SaaS providers today are SAS70 certified, which includes regular auditing by third parties on all aspects of security - from network firewalls to authentication policies to procedures for employee termination (Box is currently undergoing SAS70 certification).
Storing business data in the cloud requires rethinking security, and we're seeing a lot of innovative IT professionals begin to embrace this new approach, which in turn frees them up to focus on more strategic technology initiatives. Our Box.net customers range from small businesses to Fortune 500 companies, all of whom see view Cloud Content Management as a more valuable, productive and secure way to manage their content.
Won't the future of Enterprise IT will be a mix of cloud-based solutions and on-site data services?
I'm not proposing that every single business application or process will be in the cloud - some may make more sense to keep on-site, at least in the foreseeable future. But there are a vast number of cloud-based services that offer significant advantages over traditional enterprise software - we have customers that run their entire businesses in the cloud, using a combination of Google Apps, salesforce.com, Wordpress.com, SuccessFactors, and many others. Most of these customers are small businesses, but as these platforms continue to mature this approach is fast becoming a reality for larger enterprises as well. And a serious perk of using cloud-based platforms is that they're far easier to integrate - whereas traditional enterprise software integrations are tedious, requiring significant IT time and even consultants for systems integrations, cloud services take an open platform approach, making integrations seamless and more effective.
Is the Cloud really ready to tip in the next few years? Isn't a five to ten-year timeframe more realistic?
By no means will all businesses move to the cloud in the next few years, but we will see a significant surge in cloud adoption by mainstream businesses, with competitive advantage going to the early adopters. Small and medium businesses have largely been the first to embrace the cloud, drawn by the cost efficiencies of web-based solutions. The cloud will tip when this trend extends to the enterprise, and we're already beginning to see significant traction with large-scale deployments of Google Apps and the dominance of Salesforce as a CRM solution. At Box.net, our top ten deals of 2009 were with name brand companies, and our enterprise revenue increased 535%. Cloud platforms are maturing at a rapid rate, and as they do, adoption will accelerate.
This discussion is far from over. Throughout 2010, we'll see cloud vendors make major product enhancements, and large businesses exchange traditional enterprise software for cutting-edge cloud-based services. The tornado is not yet here, but it's time is soon.
Post by Aaron Levie, Co-founder and CEO