Future of Cloud Computing Survey Validates Microsoft’s Strategy

By Sangara Narayanan

In a recent cloud survey conducted by North Bridge and Wikibon, seven out of 10 companies reported that they use Software-as-a-Service (SaaS), of which 61% of companies are using one PaaS/IaaS vendor and 56% of companies are using multiple SaaS Vendors. The preference for one single cloud vendor is completely understandable; it would reduce the overall complexity of the technology work involved.

Amazon (AMZN), Microsoft (MSFT), IBM (IBM), Oracle (ORCL) and Google are all in the cloud race with the top three running away with most of the market. Of these five companies only Microsoft and Oracle have a solid breadth of cloud offering that includes SaaS, PaaS and IaaS. IBM has the IaaS and PaaS components as well but lacks the breadth of in-house applications that Microsoft and Oracle have.

While IBM has its own strength in the Analytics side of the SaaS segment, Oracle is extremely strong in the business management SaaS market, which includes CRM, ERP, HCP and SCM. Microsoft is slowly building into that segment with Microsoft Dynamics and already has a massive presence in the office productivity segment with its Office 365 suite of applications.

But Microsoft is way ahead of Oracle when it comes to the IaaS segment with Microsoft Azure growing at triple-digit speeds for the last several quarters. Oracle’s IaaS segment grew only 6% during the latest quarter, a growth rate that exemplifies its weak position in the strongly growing IaaS market.

As Office 365 keeps marching onward and upward, Microsoft is gaining an even stronger foothold in the enterprise segment. Its IaaS offering is as good as any other company out there in the segment, something that is also validated by the strong growth numbers it has been reporting in the last two years.

As Microsoft keeps expanding its business management software portfolio that includes CRM and ERP, the company will be in a unique position with strong cloud offerings in SaaS-PaaS-IaaS segments that will be unmatchable by its competition.

Companies will naturally gravitate toward a single vendor that can take care of several workflows instead of going through the headache of handling multiple vendors and worrying about integrating all of them to work seamlessly. With Microsoft, that won’t be a problem, and that’s something Nadella is consciously crafting out of the company’s many disparate products.

But don’t get me wrong. The need for multiple SaaS vendors will always be there. Different businesses have different needs, and there will be times when only a niche player would be able to adequately address those needs. But when you have a company that can take care of the majority of the workflows as well as workloads, like Microsoft can, you’d rather keep Microsoft to handle all the heavy lifting while throwing in a few more SaaS companies to address the entirety of your technology needs.

There won’t be a need to have Salesforce (CRM) manage your customer relationships, Oracle handle your enterprise resource planning, Microsoft handle your office productivity suite and Amazon handle your infrastructure. All you need is a few clicks on your Microsoft Platform. This ease of use is exactly what Microsoft eventually wants for the enterprise segment, and it is now extending that concept to cover not only software applications, but also devices and operating systems.

In the not-too-distant future, Microsoft will not only be able to accurately target businesses using its massive LinkedIn database, but it will be able to get in and entrench itself into the client’s SaaS-PaaS-IaaS requirements because of the sheer breadth and depth of cloud offerings, leaving little to no room for competitors to even attempt poaching it from Microsoft.

That’s Microsoft’s biggest upside at this moment, and a strategy that will help cement its position at the top of the enterprise-focused market.