Transcript of a BriefingsDirect podcast on the state of cloud computing and its future outlook.

1. VC Michael Skok on the State of Cloud Based on Latest
North Bridge Annual Survey of Sellers and Users
Transcript of a BriefingsDirect podcast on the state of cloud computing and its future outlook.
Listen to the podcast. Find it on iTunes.
Dana Gardner: Hi, this is Dana Gardner, Principal Analyst at Interarbor Solutions, and you're
listening to BriefingsDirect.
Today, we present a special podcast discussion that draws on a new survey
about cloud computing and explores the business growth opportunities for
buyers and consumers of cloud services alike.
First we'll hear the results of this multi-year annual survey on the cloud
market and then explore some of the implications for where the growth
opportunities are and where the inhibitors for the growth may be.
Here to share his insights into where the cloud business has been and where it’s going, we're very
pleased to welcome Michael Skok, Partner at North Bridge Venture Partners since 2002.
Before joining North Bridge to seek out great entrepreneurs and lead innovative software
investments, Michael had himself been an entrepreneur and CEO in the software business for 21
years.
He founded, led, and attracted more than $100 million in venture backing to his investments in
multiple successful software companies. As a VC himself, Michael has invested in many
entrepreneurs who have built more than a $1 billion of value, focusing on large market-changing
technologies and disruptive business models such as software as a service (SaaS), cloud
computing, open source, and mobile.
Current representative investments include Acquia, Akiban, Apperian, Demandware
(NYSE:DWRE), and Unidesk, as well as Actifio and Revolution Analytics.
Michael's passion for innovation and entrepreneurship is also fueling his work mentoring and
developing the next generation of entrepreneurs. For example, he is currently developing and
leading workshops such as the "Startup Secrets" series with the Harvard i Lab. You can follow
him at www.mjskok.com and @mjskok.
I'm very happy to welcome you to the show, Michael.
Michael Skok: Great to be here.

2. Cloud hype curve
Gardner: I'm very intrigued by any survey on the cloud market nowadays, so let’s start at a
fairly high level. I'd say we're probably now in about the third year of a fairly steep cloud-hype
curve. Is there anything to indicate from your survey and your experience lately that there is a
waning interest or enthusiasm for cloud? Are we past the peak? Are we still in a period of where
people are still building up their enthusiasm for clouds?
Skok: That’s a great question, Dana, and it falls into two parts. Obviously, there's an increasing
interest in understanding cloud, but as cloud has captured so much attention, there is also a
respectful, significant actually, interest in understanding what the real applications and potential
for it are. People are trying to get beyond the hype, at this stage, to understand the practical
applications and opportunities.
Gardner: Is it fair to say that confidence is up because the perceived risks are down, or are we
still working through how confident people are and whether there are significant risks here?
Skok: Maybe the best way to answer that is to give you some specific data from the survey, and
rather than have my commentary, it will give you the market’s viewpoint on this. That’s one of
the key reasons we run the survey -- to try to understand what vendors and customers believe are
some of the key issues, both driving and inhibiting the cloud.
So I'll jump in and give you some of the inhibitors first to answer your question on risk, for
example, and then perhaps we can talk about some of the drivers. Does that sound good?
Gardner: Yeah.
Skok: On the inhibitors, one of the things that’s interesting this year is that, if you look back to
2011, 10 percent of the survey respondents would have said that the cloud is
just too risky, and they gave many reasons last year. This year, we're down to
3 percent. So that’s a significant drop.
Now, I'd argue that 3 percent says that you're at a point where people are
beginning to understand cloud better, because the issues that they are raising
are things like data sovereignty and the Patriot Act. Those are very real issues
that are unlikely to just disappear, and they are beyond just cloud. They have
to do with the reality of how people have to run their businesses.
The good news is that 12 percent feel that the cloud still needs to mature. That's not so significant
number, but it’s down from 26 percent in 2011. So again, people are starting to feel that the cloud
is obviously meeting more of their needs.

3. When you look at the issues behind those 12 percent who are looking for greater maturity, there
are things that again you would expect to see in an early-stage market -- things like security and
compliance, and that’s very typical.
If you looked at any major trend that comes into the marketplace, if you looked at the initial
early days of the web and eCommerce, people said things like, "We'll never put our credit cards
on the web." Now, not only do we put our credit cards on the web, but we allow people to do
Internet banking and take photos of the checks as a means to make deposits from their
cellphones.
So things have come a long way, and that’s just the time scale that it takes. It’s typically several
years before things mature and get people confident in these kinds of applications.
Encouraged by results
So I'm encouraged by those results. The next obvious thing that comes out of the survey is how
many people are still experimenting. About a third are experimenting, 34 percent to be precise,
with concepts in the cloud, driving applications, and using the cloud in some innovative ways.
For example, you see companies like Bank of America, who do trials using the cloud, and if they
are successful, they use the cloud’s elasticity to quickly expand their trials. If they're not, they
just throw them away. That’s a great example of how the cloud is specifically enabling people to
do trials and get to market faster and be more effective.
And the other side of the coin, the great news this year is the rapid growth in confidence overall
in the marketplace. If you had asked how many people had complete confidence in 2011, you
would have gotten an answer about 13 percent, and this year it was fully 50 percent.
So we're not quite at a tipping point, because you have to double-click on that 50 percent. You
have to understand the split between vendors and customers, and vendors were over half. In fact,
56 percent of them have complete confidence in the cloud. So you're seeing net new
development in cloud from independent software vendors (ISVs), absolutely the tipping point.
You see very few companies starting up today that aren’t building in a cloud.
But if you look at the customers, they're not quite at that same level of confidence. Just over a
third, 37 percent in fact, have complete confidence. More of them are experimenting and waiting
for it to mature, as we were just talking about, and some of them still feel it’s too risky.
So it’s a long answer to your question. I hope it gives you some substance backed up by the
survey to get a sense of this, and I am happy to answer any questions behind that.
Gardner: It’s interesting that those who are in the cloud ecosystem themselves are very
confident, and you'd think that they would have the most to lose. They're making their
investments, but the longer tail towards the consumer side is still catching up to that.

4. It certainly seems optimistic for the market in general that those in the know, those that are using
these to build business, that they themselves will be providing cloud services, are so optimistic
and confident.
Skok: It turns out that there’s an interesting representation of players in the survey here, in that
we have got both vendors and users responding. There were over 785 in total, mostly C-suite, but
more than a third of it are customers.
Of the vendors that are represented, we're covering everything from Amazon to Citrix, to some
of the mid-tier players like Rackspace, Red Hat, and others, and also up-and-coming and
emerging players, for example, Eucalyptus and Acquia.
Bridge the gap
So it’s a very good breadth of players to drill one level beneath this, and we did that. We tried to
understand what’s going to bridge the gap between vendor’s confidence and user’s confidence
and we heard five specific things.
Number one, people want more complete value propositions. A lot of what’s being sold at the
moment is technology and what people really want is the second key thing, which is clear
business benefits. And they want that in the form of case studies, which is the third thing that
would help people.
The fourth thing is more proof of specific opportunities that are being addressed in their industry,
the vertical specific applications if you will. The bottom line, the fifth thing, is that people want
greater return-on-investment (ROI) case studies to be presented to them so that they can put that
forward as they champion this on an economic basis.
So to answer your question in summary, Dana, what we'll see is this gap between the confidence
in the cloud the vendors are seeing and what users are seeing it is going to get bridged, as we
become more able to deliver on the benefits with specific examples that drop right to the bottom
line.
Gardner: Just to allow our audience to evaluate the data that we're presenting, tell us a little bit
about the survey -- how it was sponsored, when it took place. You've told us already about the
participants being C-suite level folks in both the sell and buy side, but tell us a bit more, just so
we have a better sense of the quality of this data?
Skok: Sure and by the way, the full results of the survey, as you may have already pointed out,
are available on our site at mjskok.com. Just look under the "Industry for Cloud," and you'll see
"Future Cloud."

5. This year’s survey is an opportunity to get a level set as to what’s going on in the industry, where
are we, and to understand what’s going on in the key drivers and inhibitors, because everybody
in the ecosystem is trying to understand how to better address the tsunami that’s rolling over the
industry in cloud computing.
So the beauty of the survey is that it represents a broad swath, about 40 of the key vendors, both
driving and enabling cloud, and also key buyers and C-suite members who are trying to evaluate
and deploy cloud.
The idea behind the survey obviously is to enable both sides to get a better understanding of how
to take actionable steps toward implementing what might be the next generation of IT. Pretty
much everybody recognizes cloud as the platform on which not just applications and solutions
are going to get built, but IT is going to transform to the next generation of providing itself as a
service in an effective form.
Gardner: Once again, this is a North Bridge sponsored survey. When were the results gathered?
Skok: The results were gathered in the summer, and they're continuously updated.
Independent survey
For example, we're in constant conversations with these vendors and also with the CIOs to
continue to keep them fresh. But while we sponsor it, 40 collaborators are driving it. Again, the
details of that are on the web, but the point is that it’s an independent survey so that no one
vendor is driving it, it’s a collaboration of the industry as a whole to ensure that it's an
independent survey.
Gardner: One of the things that jumped out at me, as you were trying to define what we could
start to call loosely "killer applications of the cloud," where this is going to get traction, clearly
one of the areas was platform as a service (PaaS). So let’s address that. Then, there's also big data
-- fast data, analytics in the cloud. How prominent were they in the survey in terms of the
priorities or the endgame for these two types of uses?
Skok: That’s a great question. You only skipped one, so I'll cover it briefly. The most surprising
thing is just how much SaaS has gained in the survey since last year.
We also worked with Goldman Sachs, to give credit to them, and some of the information is also
pulled from the industry as a whole. We found that 67 percent of the survey respondents are
already deploying SaaS applications, and the value that people are seeing is in the application
solving real business problems.
Of course, SaaS is built on PaaS and infrastructure as a service (IaaS) too. The important thing
that you are pointing out is that there was a significant jump of interest in PaaS this year. In fact,

6. looking forward to the future, the respondents were saying that 75 percent of them thought that
they would be building software with PaaS in the next five years, which is a big jump.
We have a viewpoint on that, and I'll come back at it in a second, but what’s interesting here is
that people recognize that they're going to be building applications. Why would they build them
in anything other than in a cloud-based manner? That’s what’s so interesting here.
Now, I'll come back to that, because there’s some interesting controversy around how PaaS will
play out and that came out of the survey too. But to talk a little bit about what you were
describing as key application areas, big data was certainly one of them. It was top of the list on
what people thought would be changed by cloud. As far as which application categories would
be disrupted most, big data was at the top of the list.
Beneath that, were others that wouldn't surprise you, for example, customer relationship
management (CRM). With Salesforce having led that charge, it’s not surprising that people see
that continue to be a key area.
What was exciting to me was that number three was eCommerce. In our own portfolio, for
example, we saw one of my investments, Demandware, go public this year and that was real
evidence to me that you're going to be able to build confidence in mission-critical applications.
eCommerce applications, like Demandware, are the front door representing major vendors and
brands, and people can track the nature of their business literally second by second and measure
how much revenue would be lost if eCommerce applications were down.
Mature and strong
So the fact that major retailers and brands now bet billion of dollars on eCommerce as a service
gives you a sense that people feel like the technology is in place and mature, strong, and reliable
enough for them to back it with their brand and have it at their front door. That was very
interesting.
Gardner: Just to expand on that a bit, in addition to retail and consumer side eCommerce, we
saw SAP acquire Ariba. So there is obviously some interest in the B2B side as well.
Skok: Exactly. The B2B side is very early, and there is tremendous potential there too. We think
that’s relatively untapped and that there's great white space there. You're quite right.
Gardner: So continuing down your list.
Skok: The list obviously is long, but what we did was to look forward and try to understand
some of the key areas that are driving cloud and some of the opportunities. I'll cover what we
talked about as the future cloud formations and the potential opportunities for applications.
Would that be helpful?

7. Gardner: Yes, please.
Skok: They fall into what we call five cloud formations, and we're specific in talking about
formations, as opposed to cloud-washed opportunities. What we mean by that is that you've seen
a lot of vendors try to bring out just another level of their application and host it in some shape or
form and deliver it via the cloud. That’s really not what we're talking about here.
Those kinds of things that aren’t true multi-tenant applications that are born in the cloud, and we
think they're not the real future here. We think the future is in applications that have been built
specifically for the cloud and enable you to do things that you wouldn’t find possible should you
not have had the cloud available to you.
The formations we talk about first are media and entertainment. People have gotten used to that
with iTunes and their music and Netflix to get their movies online. That was a major revolution
and it started initially with web ordering where Netflix was delivering physical DVDs. As the
pipes got fatter, we could just physically deliver over the web, and you're seeing more and more
of those opportunities.
If you look at gaming, it has also all gone online, and people are taking it for granted. That’s
actually a lot of what drove the cloud initially. This media and entertainment formation is very
real, here to stay, and we think has tremendous opportunity, especially as the mobile platform
expands too.
The second key area is what we call social and collaboration. The social and collaborative cloud
is very much understood by people who use Facebook in the consumer world. What's interesting
is that it has moved into the enterprise with applications important to supply chain management
that are enabling things like tighter inventory control.
Also, there's collaboration all the way down to the customer, so that people can get better service
and support, and in many instances self-service, which has a great cost savings and ROI payback.
Easier to collaborate
You're seeing that now start to play out. People are getting used to the fact that it's so much
easier to collaborate in the cloud than it is to try to send people on-premise applications to work
with, when you want to collaborate with them. We'll see a great expansion of that going forward
too.
The third key area, which I would describe as almost a platform shift, is identified as mobile and
that includes location data too. Mobile, if you think about it, is not possible without the cloud.
Again, it goes to a real, true cloud application.

8. These devices that we carry with us, smart as they are, are nothing without the connections back
to the cloud, to be able to do everything from synchronizing our contacts, calendars, and email,
to much more important and significant things, such as to connect back to business processes and
provide such key information as price lists and contracts for the people in the field to be able to
do their job in situ.
That’s a really important shift, and the incredible rise, it's unparalleled, of new devices like the
iPad, which has been the fastest growing device ever, in both consumer and enterprise, are giving
rise to new demands and new services.
What's perhaps obvious when you think about it, but less obvious in this context, is how much
location data is being generated from that. We'll talk about that in terms of the big data formation
in a second, but location data is providing new opportunities for new applications. That links
nicely to the fourth key cloud formation that we think about. That's commerce and that includes
payments.
eCommerce, as we were just talking about, has really become something that people take for
granted that they can do over the web. It's not just Amazon anymore, as you said, it's even B2B
commerce, for example, that companies are taking a lot of the supply chain, collapsing it, and
taking out cost.
That’s being enabled by the cloud. As mobile payments and the payment system in general
become more accessible by the cloud, which is more of a political challenge than it is a technical
one, that will become a very interesting opportunity for new applications that will be spawned
and connected back to the cloud.
All of those applications, as I started to hint at with location data, are generating a huge amount
of data, and that’s giving rise to the big data cloud. Big data is interesting on two fronts. It's
interesting because with every click and step we take we're creating information that is being
collected in the cloud, in a form that you can consider part of the big-data opportunity.
What's interesting on the second side of the coin is that the cloud itself provides the kind of scale,
indeed economy of scale, for crunching that data, analyzing it, and providing insight from it.
The fact that you can spin out an analysis of anything from the human genome to a click stream
in the cloud, and then provide insight, in some cases in real time, to drive applications wherever
they may be and reach them with things like your mobile devices, is really changing the game.
Cloud formations
So these five cloud formations: media and entertainment, social collaboration, mobile and
location, eCommerce and payments, big data and analytics, are where we think cloud is
dramatically changing the scope of the landscape.

9. When you look at them, what's really exciting here is what's happening at the intersection. I'd be
happy to give you an example of that, if it's useful to you.
Gardner: What's very fascinating to me, Michael, is not just these impressive arenas that you
have described on their own, but how they intersect and in many ways multiply each other --
being mobile, having the big data to crunch, relating that data into a commerce activity, and
bringing that back out through collaboration or social activities. It's really the whole greater than
the sum of the parts here. Please explain a bit where you think that is going or where the survey
tells you it's going?
Skok: You said it very well. The sum is greater than the parts here, and you've obviously picked
right up on it. We could give you many examples, but I'll take one that’s simple, so that
everybody can relate to it.
It used to be that if you thought about going to see a movie, you would have to go and check
your local listings, but obviously people are way beyond that today. We can go right online and if
it's not available to you at Netflix, you can quickly check to see where it is available on your
local cinema from your cellphone geo tag where you are and it can quickly tell you that the
closest place to go to see the movie.
Of course, you can use commerce in the cloud to buy it on something like Fandango. Then
what's interesting is that you can choose at that time to check out what your friends think of the
movie, see the collaboration that’s been going on of reviews from people that you know, and
decide whether it's that movie or something else you should see.
So you're using all of the things we are just talking about, media and entertainment, social
collaboration, mobile and location, commerce and payment, to do all of that.
What gets to be exciting is all that data that’s being generated, if you go and see the movie, or if
you rate it yourself, it gets fed back to you in things like recommendations for the next movie
you might want to see, or if you take your kids, the kind of merchandizing that follows up with
offers to you, and payments that can drive you to make further additional purchases.
And that’s just a simple example. There are many others I can think of that are, exactly as you
say, the whole being much greater than the sum of these individual client formations. It's really
quite game changing.
Gardner: So who are the beneficiaries? Clearly there is a business to be had providing cloud
services and in integrating process benefits across some of these domains. You can sell hardware
and software. You can build new business models by either giving consumers things they
couldn't get before or making what they had done before far more efficient and productive. But
where is the margin?
This gets to the business of cloud. We see Amazon being very aggressive on price, maybe racing
to the bottom on some of the commodity services for IaaS for example. And we certainly expect

10. a lot of competition between the likes of Google and Microsoft for cloud and PaaS types of
services. Salesforce of course is in there.
But where is the point in all of this where you could say, "Here is another Apple with the iPad.
Here is the margin. Here is the place where the business is as revolutionary as the productive
benefits of cloud activities?"
Three examples
Skok: Very good question. I'm going to give you three examples at the different levels: so one
at the application level, one at the PaaS level, and then one at the infrastructure level. I hope that
will be helpful.
At the application level, the big game changer is going to be what I call social commerce. It's the
intersection of two of those cloud formations, if not three of them, which is social connections
and recommendations, connected with eCommerce, and potentially mobile within there too.
You're going to see there is tremendous opportunity, because what people most rely on when
they are actually buying things is their friends and trusted recommendations, and we're very early
in that. Surely, people have begun to recognize the power of the like button, but we haven’t yet
seen that translate into commerce. We're early in Facebook trying to realize that.
The other extreme, the eCommerce companies, are taking off doing what we call omni-channel
commerce, connecting everything from bricks and mortar, and are also recognizing the power of
being able to do that as people are out and about with the mobile devices and gaining data on, for
example, local offers and so forth.
The next great opportunity is going to come in the combination between social and commerce,
and it might involve mobile and local as well. We haven’t seen the next great company emerge
from that, but we're certainly seeing many opportunities. At the application level, that’s probably
a good example.
To deliver on all of that, one of the things we're taking for granted is that the infrastructure is
going to be in place to do all that. A part of the survey that we always take time to ensure we
cover is to understand the things that people are actually spending money on right now.
If we look at the intersection between vendors and users, and in the survey it's a slide called
"Rainmakers," at the bottom of the infrastructure stack there's still a tremendous amount to do to
enable the kinds of applications that you and I are talking about here.
Some things are very basic, the things like single sign-on on authentication to enable this
collaboration across the supply chain. More specifically, in mission-critical businesses, it's things
like backup, archiving, and business continuity to ensure that all this information is being stored
and managed on a significantly scalable basis.

11. When we looked at all that, the thing that stood out, which is not going to surprise you probably,
given that we talked about big data, is that people expect one of their greatest areas of spend to
be analytics.
So at the infrastructure level, I think we are going to see some of the things that I talked about
that are basic, like next generation of single sign-on. But the big thing that came out was that
people are looking for more analytics, and more of the capabilities that are going to be
specifically taking advantage of cloud scale.
Insights in real time
Whether that’s using things like Hadoop or next generation NoSQL or NewSQL, our
capability is to get those kind of insights in real-time. In the end, the more data that’s being
generated, the more we're going to have to step up the scale of analytics to provide insight in an
effective time scale.
Those two would exemplify the application opportunities and the infrastructure opportunities. In
the middle, as we talked about earlier, there’s a great deal of interest in PaaS, and it's less clear to
me what the opportunity is for a specific breakout.
I'll say both what the survey revealed and what it didn’t reveal, which is interesting. We talked
about how it revealed that there is a strong interest in PaaS, but when we dig in with vendors,
what we see is that the vendors are actually at the bottom of the stack. The IaaS vendors, people
like Amazon, VMware, and others, are actually trying to add more capabilities to their IaaS
platform, to enable them to feel more like a PaaS.
If you look at Amazon, they've added numerous new services to make themselves more platform
like, and they have become the de facto standard there. So they are moving from the bottom
upwards.
But you also see the SaaS vendors, exemplified by Salesforce.com, introducing their PaaS, like
Force.com, to extend the use of their infrastructure or their applications to be more platform like
too. There's a pretty big squeeze from the top and the bottom that’s making it difficult to see what
will be the white space for a PaaS vendor.
The honest truth is that I can describe the first two, what the opportunities for the SaaS and IaaS
are, but it's not clear to me where the white space is in PaaS, and it feels like it's getting
squeezed, if that makes sense.
Gardner: So to sum up, perhaps there is a significant business to be had up and down the
spectrum, infrastructure, hardware-software, facilities, management, building out the
applications, but perhaps one of the larger two opportunities that's yet to be solidified or clear is
in the analytics and in the PaaS.

12. Now, in the past, development was often a tricky market to make money in -- tools, frameworks,
IDEs, but in many cases there was a deferment involved. You might break even or even lose
money on some of those areas in order to capitalize on the deployment side or even gain lock-in
for those applications on a platform, and that's where you would have a very good business.
I think what we're seeing with cloud is something a bit different. When it comes to lock-in, and
you have had experience of course in open source software, what are some of the good things
and some of the more risky things when it comes to this desire, as we've seen in the past, to lock
people in to either a platform, a service, a standard, or even a toolset?
Skok: You're on the money on a number of different fronts. First of all, as you say, people have
historically very rarely made money out of tools. I don't think it will be any different in the
cloud. The interesting piece in the cloud is you have the runtime potential to make money, but
even then, it's an economy of scale game, so it's not a place that's easy for startups to play.
Platform lock-in
The second key point you're making is that people traditionally have looked at it as a means to
get lock-in to a platform, and that is the exact thing that people are worried about in this cloud
revolution too. The third biggest item of what's inhibiting cloud adoption in the survey is lock-in,
and the fourth was interoperability. They were both very high on the ranking.
What people are worried about there is very simple. If we double-click on it, they're looking for
three things to avoid lock-in. They want to avoid data lock-in, they want to avoid programmatic
lock-in with application programming interfaces (APIs), and they want to avoid being locked
into proprietary services or features that can't be transparently supported on other platforms.
That's a real challenge for the PaaS players at this point, because the giant here is Amazon, and
they've got a series of de-facto standards. There are some companies like Eucalyptus who have
been very smart and are reverse engineering or making sure they are compatible with those
standards.
But those that are trying to compete on new grounds are certainly going to have to struggle with
gaining critical mass and then answer the question about how they'll provide that interoperability
on those three layers we just talked about, to get over that inhibitor of an adoption that people are
worried about around lock-in.
Gardner: So perhaps there's a de-facto standard around Amazon, but being challenged by
OpenStack and CloudStack as well. Is there any inference in the survey as to whether the
OpenStack and CloudStack approaches would mitigate a de-facto standard evolving rapidly, and
how do you view that?

13. Skok: I'm going to slightly branch outside of the survey and mention that for several years,
we've run an equivalent industry survey on open source. It's very widely adopted now, but when
we started several years ago, it was early.
We've seen that cloud has very much become a part of open source, not just because a lot of
cloud is built on open source, but because, as you say, people are looking at open source as a
means to answer this lock-in. It answers one of the key areas, which is certainly programmatic,
an API type lock-in.
People will have open access to the source to modify, adopt, and even change to create their own
abstraction layers, but that will potentially enable this kind of interoperability.
Things like OpenStack, CloudStack, OpenShift, and other platforms are potentially an answer to
that. The challenge there is that they're relatively young and early in their adoption. While
they've got significant backing, you have yet to see broad deployment of them yet.
I'm hopeful that open source will provide some of the answer to vendor lock-in. It's certainly
being proposed that way and it's being supported that way. If you talk to a certain segment of the
user population, they would tell you that it's exactly what they're relying on, but in reality, we're
too early to call that one.
Making good money
Gardner: One observation from me would be that the folks that are in a position to make good
money on infrastructure, hardware or software facilities, and management, seem to be a natural
affinity environment with the OpenStack, CloudStack approach, but those higher up the food
chain in cloud that have more of a pure-services business model might be interested in having the
de facto standard land in their particular data center. It will be interesting to see how that pans
out.
Tell us once again, Michael, how people can get more information on your survey. Where could
they go to get the nitty-gritty?
Skok: They can just go to mjskok.com under Industry, Future of Cloud Computing, and the full
survey is available from that site on a slideshow for people to click through. Also, it's being
covered in many different places by many of the vendors who have supported it. There's a lot of
information being disseminated by the collaborators. You have full access to it.
Just to answer your question, because it's too good a question, who has what interest to go
where? It's best exemplified by Oracle. Oracle took a long time to enter the cloud market. Of
course, they have benefit all the way from hardware out to the applications because of the
acquisition of Sun.

14. That's how they're pushing their cloud approach as a series of applications that are totally
integrated from hardware, all the way through to software. That's certainly going to suit some
class of buyers.
But if you look at major waves like this, it's always a while before people can afford to have best
of breed at various different layers. If you started building application, as we did in some of our
investments like Demandware eight or nine years ago, there was no IaaS, there was no real depth
of Amazon and no service-level agreements (SLAs) that you could have built a mission-critical
eCommerce application on.
That is evolving, and the more stable and capable the IaaS and PaaS players become, new
applications will be to take advantage of those, and new vendors will potentially be able to take
advantage of best of breed. That's what's interesting about the surveys, but it's all about verifying
and tagging the state of the industry to see where we are and benchmark how the future is going
to play out.
Gardner: Perhaps what we're seeing is a flip from best of breed being a technology to best of
breed being a service or ecosystem approach. And if you can perhaps sweeten the offer of
moving your best of breed mentality in that direction by not locking people in, or at least giving
them an option to have interoperability, or mobility of their services, then that might be an
irresistible offer that the market can't refuse. We just don't know who is going to make it, right?
Skok: That's exactly right. That's perfectly said. A good example to highlight how this is still
playing out is Zynga, who reverse burst to their own zCloud because the economies of scale
made it worth their while to do that.
If you look forward, people are even talking about cloud brokerages. I think it's too early to do
that. Forrester had some thoughts about that and was talking about cloud brokers like travel
agents. I think we are a ways off from that.
But in the ultimate scenario, exactly as you were talking about it, you might see a place where
you have best of breed, cloud services, and all kinds of cloud formations that we were talking
about.
Best of breed
Applications will effectively be an amalgamation of the best-of-breed cloud services and cloud
formations that will enable new classes of applications that have interoperability, or at the bare
minimum of things like data that's passed up and down supply chains or along applications
streams. The consumer is the ultimate benefactor, because they're getting those, not only at best
of breed, but hopefully at the lowest cost and at highest value.
Gardner: Then, perhaps it would be embedded services across those best of breed processes that
would include widespread analytics, mobility, and location services, so those become more

15. sweeteners to the offerer. There would be a race to who can put together the best banquets of
services under the best interoperability terms and licensing terms. So again, it could be a very
interesting next five years.
I assume that over the next several years, you're going to be continuing to do this survey each
summer and therefore get the gravitas that we have seen with your open-source survey.
Skok: Indeed. There's been unbelievable response to it. In fact, just to give you a sense of it, the
open-source survey took a number of years to gain the kind of momentum that it's now enjoying
in its seventh year here.
This survey gained such incredible popularity that within the first couple of years, it already has
as much support from the industry as the entire open-source survey does. And we have got
tremendous demand to continue doing it, from both vendors and customers alike.
We're continuing to use it to keep dialogue between vendors and customers and enhance the
industry’s ability to respond to what they see as the future. So with your support, we will
continue to do it.
Gardner: I look forward to periodically dropping in and learning more about the survey results
and, of course, some of the insights and inferences that we can draw.
Skok: Thanks.
Gardner: You've been listening to a special BriefingsDirect podcast discussion on the cloud-
computing market and how a recent survey at North Bridge Venture Partners helps define the
business growth opportunities for buyers and consumers of cloud services alike.
I want to extend a huge thank you to our special guest, Michael Skok, a partner at North Bridge
Venture Partners. Thank you so much, Michael.
Skok: Pleasure. Great being with you here, Dana.
Gardner: This is Dana Gardner, Principal Analyst at Interarbor Solutions. Thanks to you also
our audience for joining us, and don't forget to come back next time.
Listen to the podcast. Find it on iTunes.
Transcript of a BriefingsDirect podcast on the state of cloud computing and its future outlook.
Copyright Interarbor Solutions, LLC, 2005-2012. All rights reserved.
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