Earlier this week -- during the Amazon EC2 outage -- Forrester Research released its report "Sizing the Cloud," which projects the size of the cloud and its various xxx–as-a-service segments between 2011 and 2020. According to the report, the world market for cloud service will expand from $40.7 billion in 2011, with a little over half, $21.2 billion, from public cloud services, to greater than $241 billion in 2020. Do you think EC2-gate makes them want to do one more editing pass?
IaaS, PaaS, SaaS
Typically, cloud-computing services divide into three major categories:
- Infrastructure-as-a-Service (IaaS): IaaS is the lowest level of the cloud technology stack. IaaS provides operating system support, storage and processing. Vendors in this sector include Google App Engine and of course Amazon’s (news,site) latest whipping boy AWS EC2.
- Platform-as-a-Service (PaaS): PaaS builds upon the IaaS layer and provides an application development platform for the cloud. Vendors in this space include Windows Azure, Heroku and SalesForce’s Force.com.
- Software-as-a-Service (SaaS) : SaaS is usually the highest level of the cloud stack and includes actual cloud applications. It’s pretty much every cloud thing most users know.
According to Forrester’s data, SaaS segment will far exceed the revenue of the other areas. The analyst firm predicts SaaS total revenues to reach $21.2 billion in 2011 and more than quadruple to $92.8 billion by 2016. This is 26% of the entire packaged software market. However, Forrester predicts SaaS will reach a saturation point in five years, and growth will slow between 2016 and 2020.
The performance of SaaS is substantially more than what is predicted for IaaS -- $4.8 billion in 2020, less than double its current size of $2.9 billion. Forrester predicts PaaS will expand to $12.5 billion -- still nowhere near the huge $130 billion SaaS market
Interestingly, Forrester doesn’t just cite cost as the driving force for cloud adoption. The report refers to the rampant consumerization of enterprise computing, where digitally tethered employees are unwilling to wait for traditional IT request processes to complete and see cloud offerings as a kind of instant gratification. However, that is a topic for another article.
What’s That BPaaS at the Top?
In addition to the traditional cloud categories, Forrester included another, less well-known cloud-computing segment, BPaaS: Business-process-as-a-service. BPaaS is even higher up the abstraction chain than SaaS. Instead of taking your payroll system to the cloud, as you would with SaaS, you put the entire payroll department in the nebulous. Traditional BPO outsourcing providers such as India, China and Latin America will likely make a play in this area. However, according to Forrester, the BPaaS market will be worth only around $10 billion in 2020. That's only about 20% of the existing $50 billion Indian outsourcing market and around 4% of the overall cloud market. Perhaps organizations are a little hesitant about cloud-based employees.