Analysts see cloud consolidation raising lock-in risk
Barely a decade into the cloud revolution, consolidation is already setting in, and the implications for customers are largely negative at this point, according to a new research report by Forrester, Inc.
The three areas of greatest consolidation are currently in infrastructure-as-a-service, desktop applications delivered via the cloud and customer relationship management. The three largest vendors in those markets already hold 70% or more of subscription revenues and are unlikely to see their market shares decline, Forrester said.
However, not everything is consolidating so quickly. Markets for electronic purchasing, supply chain management, human resources and financial management systems are still wide open. And, the authors point out, far more money is still being spent on on-premises software than on cloud services.
One of the report’s more striking findings is that Amazon Web Services Inc. and Microsoft Corp.’s Azure will capture almost three-quarters of all public cloud revenues in 2017. Microsoft, Alphabet Inc.’s Google and Adobe Systems Inc. together own nearly 90% of desktop application market share.
In the CRM market, an oligopoly of Salesforce.com Inc., Microsoft and Oracle Corp. together hold a nearly 70% share of all software-as-a-service subscription revenues for salesforce automation and customer service applications. Marketing automation is similarly dominated by those three companies.
Forrester foresees significant consolidation coming over the next three years in the areas of e-purchasing, HR and financial management. However, some markets are going the other way. Researchers expect the e-commerce server market to actually become less concentrated as new competitors enter.
And some categories may not move to the cloud anytime soon. They include business intelligence, product lifecycle management, enterprise content management, manufacturing resource management and governance/risk/compliance. Those categories of software are still purchased mostly for on-premises deployment.
Marketing consolidation is nothing new in the computer industry, but it’s happening at a faster rate in the cloud for several reasons. One is that the challenge of building a customer base doesn’t require the kind of big sales teams and marketing budgets that were necessary when software was delivered on-premises.
