5 Cloud trends that will revamp the SaaS space in 2019
By Kamal Jacob
Gone are the days where software is made available as a standalone package and installed from physical storage devices like CD and DVD-ROMs on a local computer or a network setup. The growth of technology (cloud computing) has given businesses the advantage of moving from on-premises to on-demand – from servers being hosted on data centers in remote locations to software, platform, and even infrastructure being made available as a service on demand. The biggest advantage of all, cloud technology allows businesses to access their applications and data from anywhere, anytime. Companies realize additional savings from maintenance costs by moving their data to the cloud.
Efficient Use of cloud by existing SaaS businesses:
Talk of cloud computing and the most commonly heard term is SaaS. Software as a Service (SaaS) is one of the three categories of cloud computing in addition to Platform as a Service (PaaS) and Infrastructure as a Service (IaaS). With SaaS, the vendor (third party company) hosts the application on a server and delivers it on a mobile app or a web page via the internet. A recent tech poll reveals that the biggest increase in IT spending in the year 2019 will be towards cloud computing strategies. Therefore, more than 70% of the organizations are looking to move their applications to SaaS by 2020. With SaaS, businesses no longer need to worry about storing applications on their servers, server downtime, and scalability to handle peak load.
While most Small and Midsize Businesses (SMBs) adopt the cloud to take advantage of the SaaS model, large enterprise companies are also following suit to make their applications available on the internet. Below are a few of the industry giants who invested in the SaaS model and how they make use of the cloud.
Dropbox was one of the early cloud storage solutions for users to save their files and photos and sync them between multiple devices. With more than 500 million active users, during the initial years, Dropbox used a hybrid architecture with more than 10,000 physical servers to store user content along with Amazon Web Services (AWS). While user metadata was stored in their own data center, the actual files were available in Amazon Simple Storage Service (Amazon S3). The communication between data center and cloud storage was set up using Amazon EC2 instances.
Shopify is an eCommerce platform to start, manage and grow your business. Shopify started off with an all-cloud strategy since 2006 when they hosted their smaller services on the public cloud. Later, to meet the demand and have the best tools for their team, Shopify switched to Google Cloud and moved over 50% of the workload into Google Cloud. In 2016, Shopify considered using Kubernetes – the container orchestration system to automate deployment, scaling, and management of containerized applications.
The list goes on. Even Microsoft and Google have a SaaS-based offering of their applications such as the G Suite, Microsoft Office 365. Everything works the same way, except that your data resides in the cloud and you can access it anywhere, anytime!
Top Challenges with SaaS industry:
While the global SaaS market is on course to reach $164.29 Bn by 2022, Gartner, the world’s leading research and advisory company, predicts that almost 80% of the software providers will migrate to SaaS subscription-based model by 2020. Despite the growth, SaaS has its own limitations/challenges that hinder the expansion and growth. Here are the most common SaaS limitations and how you can overcome them –
1. Lack of integration support
One of the biggest challenges faced by SaaS business owners is integrating their cloud applications with on-premise systems. A typical cloud to on-premise integration (hybrid integration) requires data to be extracted, translated and made available across the systems. Setting up a hybrid integration is a tedious process and presents higher security risks.
The solution to overcome this problem is to switch from a SaaS-based approach to an Integrated Platform as a Service (iPaaS) model. With iPaaS, application integration is made very simple and less complex as it is meant for hybrid integration scenarios.
2. Vendor Lock-In
In the case of SaaS, your workloads are located on the data centers of a single cloud solution provider. Once your data is hosted, it’s clear that you are forced to adhere to the vendor’s business terms. If the business plans to migrate the workload into another cloud platform, they will incur a heavy cost mainly because of the lack of standardized APIs between different cloud providers.
To overcome this problem (especially for SMBs and new cloud adopters), it’s important to make sure the cloud service provider supports cloud portability that allows to share data between different providers.
3. Data Security
These days, data breaches happen quite common where millions of company records are stolen by hackers. Back in 2012, Dropbox faced one of the worst data breaches where over 68 million email addresses of registered Dropbox users were compromised. Therefore, it’s important for SaaS businesses to have the necessary data protection measures in place to secure user data.
To overcome this challenge, it’s important businesses choose the right cloud service provider such as AWS, Google Cloud, Microsoft Azure for their infrastructure, as they already have the necessary security measures in place. SaaS application providers should also implement two-factor authentication to allow secure access for users.
5 cloud trends and its significance for SaaS products in 2019 and beyond:
As enterprises continue to invest heavily in the cloud, the signs are very clear for the cloud and SaaS products to reach greater heights in the year 2019. Here are the top 5 cloud trends that we feel will be of the maximum significance for SaaS products and businesses in 2019 –
1. Multi-cloud and hybrid cloud adoption
With a multi-cloud architecture, businesses can use multiple public cloud services from different providers. This comes very handily to avoid vendor lock-in problems. Almost 84% of businesses have a multi-cloud strategy in place.
Hybrid cloud is a combination of private and public cloud to deliver a seamless experience. This offers businesses the option to take advantage of a cost-effective public cloud and use the private cloud to store their sensitive data. The biggest advantage of a hybrid cloud is that it is cost-effective and increases scalability. More organizations are making the move to hybrid cloud to gain a competitive advantage in their domain.
2. Cloud security (GDPR)
With the introduction of EU General Data Protection Regulation (GDPR) in 2018, businesses in the European Union will have to be extra cautious about where customer data is stored and how effectively the data is deleted when a user unsubscribes from the service. Companies are held responsible to ensure the safety and security of user information and heavy penalties will apply if there is any breach of user data.
3. The dominance of Kubernetes for container orchestration
While the use of Docker will continue to grow in 2019, Kubernetes is seeing an increased rate of adoption by almost 48 percent (according to the 2019 State of the Cloud Survey), higher than AWS containers, Azure Container Service, and Google Container Engine.
4. SaaS to PaaS for retaining customers
While SaaS matures and is expected to grow significantly in 2019, businesses will look to invest more into PaaS as it is expected to grow up to 56% in 2019 (from its 32% in 2016). With the PaaS infrastructure, businesses can quickly deploy their application code and add new applications to their existing suite.
5. Cloud services will continue to grow exponentially
Similar to PaaS, other cloud services like SaaS and IaaS will also see a higher number in 2019. According to Bain & Company, SaaS is expected to grow at 18% Compound Annual Growth Rate (CAGR) by the end of 2020. Similarly, the global IaaS market is expected to hit $72.4 Bn in the next couple of years. Gartner also predicts that by 2021, the total public cloud revenue will be $278 Bn.
One thing that is pretty clear is that cloud computing is evolving and SaaS businesses are seeing the advantages of cloud over traditional implementations mainly in terms of cost, security, and scalability. 2019 promises to be a great year for cloud and SaaS businesses. For businesses, this is the best time to move your workload into the cloud, if you haven’t yet embraced this technology. So, if you are looking to gain expertise and make a full-fledged career in the cloud computing field and master the cloud services, check out our Post Graduate Certificate Program in Cloud Computing.