Skip to main content

How Cloud Computing Service Management is Evolving

Cloud service management is going to become yet one more segment of the legacy enterprise software sector that's being affected by the ongoing adoption of open-source software subscription models.

The shift in end-user IT consumption preference to cloud services will trigger disruption and pressures old-school Infrastructure Management (IM) software vendors on two fronts, according to the latest market study by Technology Business Research (TBR).

Cloud consumption models rely on subscription revenue. The revenue recognition patterns for subscriptions are in stark contrast to the expensive software vendor license models that include ongoing maintenance support agreements, generally purchased after the first year of deployment.

The shift to subscription models negatively impact margins as traditional IM software vendors shift go-to-market and delivery strategies to align with end-user consumption preferences -- and the growing demand for a lower-cost IT operations model.

Forward-Thinking Cloud Management Platforms

Second, the underlying technology required to manage cloud environments is vastly different from the historical management software products sold on a license basis by legacy vendors -- such as Computer Associates (CA) and BMC.

Traditional vendors such as CA and IBM Software have to rethink how they sell and deliver these products while stitching together the IP assets necessary to manage and monitor cloud infrastructures.

Overall IM revenue grew 3.7 percent year-to-year for the 22 vendors covered in the TBR Infrastructure Management Software Vendor Benchmark, with average IM operating margin of 22.3 percent for those firms.

"How well vendors manage license erosion while ramping-up subscription revenue streams and the requisite product extensions for cloud infrastructure will be a story played out in 2015 and beyond," said Geoff Woollacott, practice manager at TBR.

He believes that this year is a tipping point for accelerated cloud adoption -- and the concomitant business model destruction for traditional legacy suppliers. End-customer consumption model preferences remain difficult to forecast accurately due to their continued evolution.

"TBR decided to subgroup our benchmark analysis given the different rates of change these vendors may experience going forward in this turbulent time in our industry," said Woollacott. "We look forward to extending the benchmark analysis in subsequent quarters as the transformation impacts become clearer through the business model analysis."

Popular posts from this blog

Why Healthcare and Smart City Apps Drive 5G IoT

Fifth-generation (5G) wireless technology for cellular networks is a successor to fourth-generation (4G) wireless technology. By 2023, Juniper Research anticipates that there will be over 1 billion 5G connections globally. The technology will provide the data infrastructure for the advancement of wireless communications and for new developments in the Internet of Things (IoT) -- including smart cities and healthcare. 5G IoT Market Development According to the latest worldwide market study by Juniper Research, 5G IoT connections will reach 116 million globally by 2026 -- that's increasing from just 17 million connections in 2023. Juniper analysts predict that the healthcare sector applications and government or other smart city services will drive this outstanding 1,100 percent growth over the next three years. Juniper examined 5G adoption across key industry sectors -- such as the automotive, mobile broadband, and smart homes -- and forecasts healthcare and smart cities will accoun

How Savvy Leaders Re-Imagine Work in 2023

As we look to the year ahead, there will be significant challenges and opportunities facing the Chief Human Resource Officer (CHRO) role. In order to be successful, savvy HR leaders must be prepared to take proactive steps that adapt and evolve. "HR leaders have faced an increasingly unpredictable environment amid many organizations mandating a return to office, permanently higher turnover and burnt out employees," said Emily Rose McRae, senior director at Gartner . HR Innovation Market Development One of Gartner's key predictions for 2023 is that the use of artificial intelligence (AI) and automation will continue to increase within the enlightened digital workplace. This transition will require HR leaders to develop new skills and competencies in order to effectively manage and lead teams that are increasingly relying on these enabling technologies. Additionally, HR leaders will need to ensure that their organizations are investing in the necessary infrastructure and re

Top 10 CFO Priorities Require Rethinking Finance

The Chief Financial Officer (CFO) role is essential to digital business growth. While CFOs do not get closely involved in the tactical details of the digital transformation of their functions, they still recognize its strategic importance. According to the latest survey by Gartner, CFOs are faced with the challenge of balancing the need for substantive digital business innovation with financial cost control and risk management. "CFOs will be stretched thinly across many activities in 2023. The survey revealed a wide range of actions CFOs plan to either lead or be significantly involved with," said Marko Horvat, vice president at Gartner. Survey Findings: The Top Ten Priorities Cost Optimization - Cost reduction remains the top priority for CFOs as they look for ways to cut costs and improve efficiency in their operations. This includes identifying cost-saving opportunities through automation, outsourcing, and business process improvement. Business Continuity - The global C