The latest Gartner forecast has confirmed that unlike spring showers, the cloud is here to stay. Spurred by the rapid shift to digital-first over the past year, global spending on public cloud services is predicted to grow 23.1% to $332.3 billion this year, compared to 19% growth in 2020. Gartner also found that software-as-a-service is the cornerstone of the market, and predicted that SaaS sector spending will increase to $122.6 billion in 2021, up from $102.8 billion. While this anticipated growth is welcome news to many in the software industry, it’s also a challenge to show real performance improvements and ROI on the massive investments that have been made into cloud computing.
The Race to True Modernization
The continuing surge in cloud adoption intersects with other items topping CIO ‘to-do’ lists: infrastructure modernization and digital transformation. Now that the acute pains of the COVID-19 crisis are fading and the economy is slowly returning to the new normal, CIOs are evaluating their investments and partnerships in terms of their long-term goals and requirements. In doing so, they’re creating a significant opportunity for software innovators.
Best-of-Breed is Back
One key trend noted by the Gartner forecast is that 76% of organizations are taking a multi-cloud approach, most likely due to the fact that no single provider can accommodate all of their needs and that buyers prefer a best-of-breed system. This perspective is also gaining steam in the SaaS market.
In recent years, “platform” became the term du jour for the enterprise technology businesses. The logic behind this is reasonable, as offering a range of functionalities and services both benefitted vendors, who could build broader relationships with customers, as well as users, who could streamline workflows within one provider. But as APIs and other integrations have made it easier than ever to connect different applications, technology leaders are once again turning to best-of-breed technologies that optimize their team’s performance.
These specialized software offerings have a range of benefits for CIOs and team leaders, including industry/function expertise, innovative features, and a deep focus on support. Furthermore, the rapid rise of API use in enterprise software is enabling best-of-breed software to offer the same utility as a larger, established platform company that’s unlikely to offer the same innovation and expertise across their entire product range.
The value of integrated best-of-breed products is increasingly being recognized by major industry players, such as Atlassian's new Open DevOps initiative (which includes a partnership with mabl) that makes it easy for technology executives to customize their workspaces without sacrificing collaboration. For DevOps leaders, this focus is a key enabler in ensuring successful adoption and growth across their organization. As they consider their long-term roadmap, CIOs and other team leaders should make the most of cloud flexibility by identifying best-of-breed software that offer cutting-edge functionalities and a wide range of integrations that make workflows seamless.
Laying the Foundation for Digital Transformation
The Gartner report also notes that cloud buyers are no longer thinking about technology investments in a silo, but rather prioritizing partnerships that prepare their organizations for the future. Now that cloud-based is the new normal, technology leaders are feeling the pain of outdated applications and are looking to radically revamp their entire technology stack. As they do so, they’re looking for partners that offer short-term value and form the foundation for long-term digital transformation initiatives.
Even though cloud environments offer unprecedented flexibility, CIOs need SaaS partners that value and support sustainable business agility and resilience. Massive disruptions - either in the form of a dynamic new competitor, shifting customer demands, or a pandemic - are the new normal and companies are defined by being the first to effectively adapt. CIOs have recognized that good vendor partnerships help support the evolving needs of their teams (and by extension, customers) as well as provide resources when disruption occurs. The next generation of SaaS innovators can rise to this challenge by focusing on trends driving digital transformation, particularly automation, big data, and collaboration, and develop their products to support customer growth in these areas.
Cloud-based is Customer-centric
Ultimately, cloud computing is a hundred billion dollar opportunity for the SaaS industry to refocus on the customer. CIOs and other technology leaders now have the opportunity to redefine their organizations to emphasize agility and resilience without compromising on either front. To do so, they’ll raise their expectations on the long-term value provided by vendor partnerships. As innovators, we need to step up and meet that challenge and opportunity.