2009 will be the Year of the Business Cloud, reckons Tien Tzuo, CEO of Zuora.
I declare 2009 to be the Year of the Business Cloud.
The Cloud has changed the technology game – some may even label 2008 as the ‘Year of Cloud Computing.’ Companies across the world, from the Fortune 100 to the four-person start-up down the road are taking advantage of Cloud Computing and its potential. And it’s not just the major Internet players – Google, Amazon, Salesforce.com – that have announced their Cloud offerings, even Microsoft has jumped on the Cloud bandwagon. But today’s cloud-based economy requires a whole new set of business rules. How are these companies born and operating in the cloud making money? How does one manage a business in The Cloud? Where do we start?
Here’s how I see it: This is a business opportunity. Everyone has been talking about the cloud as a new technology model, but what about The Cloud as a new business model? Everyone is talking about how easy it is to start a company today, with so many Cloud platforms. But how are these companies born and operating in The Cloud making money? How are they letting customers subscribe to their service, track usage, and invoice for and collect on that usage. How does one manage a business in The Cloud? Where is the Business Cloud to complement the Technology Cloud?
At Zuora, we are innovating and creating new ways for companies in the ‘Technology Cloud’ to monetize in the ‘Business Cloud.’ I strongly believe that we need to approach the cloud with this bi-level view of what the cloud really is….it’s a technology platform supported by a business platform and it all exists on the Internet. All the companies built and existing in the cloud need a way to monetize, a way to maintain data security, a way to build and manage their subscription-based businesses.
Companies like Netflix and Zipcar recognized the benefit of the subscription business model early on, but they had to build their own systems. Now, companies like Box.net and Marketo are thriving in the Business Cloud, with subscriptions as the main revenue-generator and Zuora as their billing and payments service. There are many more cloud-specific pain points that need to be solved and applications that need to be built. Here at Zuora, we practice what we preach. Not only are we building a Business Cloud platform for subscription-based businesses, we run a solely Cloud-based operation via Google Apps. Google Apps has transformed business as we know it – we are a technology company without servers!
The Business Cloud is taking hold. This is a market opportunity. US-based Gartner Research expects the SAAS market to surpass $6.4 billion in 2008, a 27 percent increase from SAAS' 2007 revenue of $5.1 billion. That is impressive growth and we can expect 2009 to follow the same path. In 2008, 70% of the money invested by venture capitalists went to SaaS companies.
I spent the past nine years building Salesforce.com and touting the revolution that became Software as a Service (SaaS). The first days of Salesforce.com were not about building another salesforce automation solution, they were about leading a revolution and completely changing the industry as we knew it. No more software. It was an incredibly bold ambition at the time and, today, we are privileged to be at the eye of another amazing technology storm.
SaaS is the just the beginning. We have entered the subscription economy – why build when you can buy? Why buy when you can rent? Companies have embraced SaaS and new companies have emerged to take advantage of the opportunities. All the companies embracing the business cloud platform have critical technology and business needs of their own. This is where we will make an impact.
The Business Cloud is taking hold. This is a worldwide trend and we are transforming the technology business as we know it. The time for the Business Cloud is now. 2009 is the year of the Business Cloud. We are all here because we believe in the power of The Cloud and its future – we’ve only seen the tip of the iceberg.
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