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Is the “App Dev” Platform-as-a-Service (APaaS) space vastly underestimated?

by ADMIN on JULY 20, 2013 in NEWS AND BLOG

A look at cloud through the lens of what we’ve learned from history

History is full of vastly underestimated technologies that unexpectedly transformed industries. The Graphical User Interfaces (or GUI) was one of those technologies. In ‘Steve Jobs, the Lost Interview,’ Steve talks about Xerox missing the boat with its GUI invention. “They could have been IBM. They could have been the Microsoft of the 90s,” said Steve. As the PC boom winds down after a 30-year heyday, the cloud is unveiling a new Pandora’s box of inventions for the next generation. In that box is platform-as-a-service, the mysterious middle layer of the cloud’s three layer cake (infrastructure-as-a-service, platform-as-a-service, software-as-a-service). And, while the modern-day “Xeroxes” aren’t paying attention, a handful of “Steves” may be seizing a once-in-a-lifetime opportunity to transform the computing world yet again.

This begs the question, “Is it possible that platform-as-a-service is one of those underestimated technologies?” It’s more than possible – it’s probable, and here are a few good reasons why:

1) It’s not about “selling hammers.”

Most people who follow cloud are overlooking the significance of PaaS because they’re paying too much attention to “selling hammers”, meanwhile they’re missing the global housing industry. That is, they’re watching estimates for PaaS sales by respected analysts like Gartner, Forrester and others. Meanwhile, they’re overlooking the mega billions of dollars that will be generated in new SaaS subscriptions over the next decade because of enabling PaaS technologies. They’re missing the new demand generation for systems integrators and cloud services. They’re overlooking the enormous markets for application migration and modernization to shared platforms. PaaS is every bit as revolutionary today, as the printing press was hundreds of years ago, but it’s a little like focusing too much on how many printing presses we can sell, instead of recognizing a newfound ability to sell millions of books all over the world.

2) Specialized Software Meets Cloud

If the history of computing has taught us anything, it’s that value is created as we move “up the stack.” If we want to truly understand where the cloud is heading, we simply need to look back at prior computing models; e.g. the desktop PC. The early players were building barebones PCs, not unlike today’s fascination with virtualized infrastructure. If you could go back in time 30 years, would you rather build barebones PCs; or would you rather have been Microsoft, giving developers a platform and the tools they need to move up the stack? Or, might have you enjoyed being one of large systems integrators (SAP or Lockheed Martin) reaping billions of dollars by building specialty systems on top of Microsoft’s platform?

The cloud is heading in the same direction – up the stack. Yes, we’re experiencing a fascination with modern-day equivalents to barebones PCs and servers. But, we’re slowly realizing that cloud infrastructure is a fiercely competitive commodity. Similarly, commodity software like email and collaboration have received a lot of attention. Meanwhile, the specialty SaaS market has barely begun, and it’s big, and it’s early. The impending explosion of specialty SaaS applications is right around the corner, and PaaS will be a driving force, just as platforms played a major role in the last computing revolution. The specialty SaaS market will provide higher margins; and, thanks to the magic of PaaS, it will scale those applications to millions of users all by its lonesome. And, there will be a changing of the guard so to speak. Many legacy software development firms will fall by the wayside with the likes of Wang and DEC, making way for a seemingly endless wave of newcomers.

3) It’s just the tip of the iceberg

Anyone investing into cloud today should consider the value that those investments will yield two or three years from now. By that time, the infrastructure shakeout will be largely behind us. Instead of barebones infrastructure services, data center providers will be value-adding their offerings by way of PaaS tools to differentiate. As PaaS lowers the skill and cost barriers for developers, we will also see an explosion of entrepreneurial talents and nimble startups cranking out SaaS applications that compete head-to-head with expensive legacy offerings from some of the biggest companies in the world. For seemingly the first time in years, we will see big industry and federal government choosing to not exercise option years on bloated contracts with legacy system integrators. And, according to Geoffrey Moore, author of Crossing the Chasm, we’re on the verge of a revolution that essentially brings social networking technologies into the enterprise so that people can work together more effectively. And guess what – PaaS will play a big role in that movement too!

4) Lots of money to be made, and a lot more to be saved

The exact size of the custom software development industry is hard to come by, however the general consensus is that it’s big and pretty darn lucrative. Get ready for good ol’ fashioned market shakeup with all the fun that goes along with it, because a massive transfer of wealth is about to take place. It takes an order of magnitude improvement to change an industry, just like the kind that PaaS infuses into the software development industry. We’re seeing companies like Salesforce claiming that PaaS helps you develop applications 5-times faster than traditional coding. The developers of SaaS Maker are boasting blazing fast gains of up to 25-times faster time-to-market in a way that’s portable across infrastructures. As bold as these claims may seem on the surface, keep in mind that we’ve seen it before. How much faster were modern-day programming languages over punchcards? How much faster were 4GLs over machine code? For that matter, how much faster were printing presses over scribes? What will happen to a software industry that has millions of new developers who can start a dotcom with zero budget – no venture capital or project funding needed? With the magic of “as a service” delivery, SaaS developers can distribute their applications globally without duplicating CDs, printing materials or securing distribution partners. The numbers can add up surprisingly fast. Imagine if ten developers use PaaS tools to create ten SaaS applications. Now, imagine if each application is served to ten organizations, each having ten users. If you followed the scenario, you would see 120,000 “subscription months” per year, and that doesn’t include upsizes to more storage, more bandwidth and integration services. So then, it’s easy to imagine what will happen when the PaaS-powered rocket ship really takes off. A lot of money will be made, and a lot more will be saved by customers. PaaS will have arrived. Good bye scribes!

5) It affects you too

If you’re a software developer, then the transition to SaaS-enablement clearly affects you in big ways. You’ll need to re-school and retool if you want to be part of the next generation in software development. If you’re a data center provider, then you’ll need to look toward PaaS to value-add your plain vanilla infrastructure. If you’re a system integrator, then you may be eye balling the gigantic application migration and modernization markets. Enterprise software companies are acquiring PaaS solutions to establish new identities. Perhaps most important – if you’re an enterprise customer, then you’re probably looking toward PaaS to turn around troubled software development projects; or as a way to escape the enterprise software companies that have held your organization captive for the past couple decades or more.

Ready, set, go!

The desktop software industry has enjoyed a long, fruitful journey. The advent of PaaS is bringing about a new software industry. It brings with it new players, lower costs and faster times to market. In the eyes of many people, PaaS is a “pretty neat” technology, sort of like the GUI was 30 years ago. And much like the GUI, PaaS may be a “pretty neat” technology that transforms the entire software industry for the next 25 years.

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