The winners have emerged in the cloud market.
Cloud computing has been a hot topic for years, but most companies are still in the early stages of adoption. As IT workloads shift to the public cloud over the next several years, opportunity abounds for infrastructure- and platform-as-a-service vendors, or IaaS and PaaS, respectively. However, as explored in a recent Technology Observer from Morningstar Research Services,1 only a handful of providers have the capital investments, research and development initiatives, and technical knowhow necessary to predominate.
To learn more about the best investments in this space, I spoke with lead author Rodney Nelson. Our conversation took place on Aug. 1 and has been edited for length and clarity.
Laura Lallos: Many of us are most familiar with software as a service, or SaaS. How do the platform and infrastructure as a service markets relate?
Rodney Nelson is an equity analyst with Morningstar Research Services specializing in enterprise software.
Rodney Nelson: The difference between SaaS and PaaS and IaaS is all about who is managing which part of the software and hardware stacks. With SaaS, a single vender, such as Salesforce.com
With PaaS and IaaS, the customer has more ability to customize. With IaaS, the only thing that the cloud vendors do is manage the core compute and storage services. They have data centers spread across the globe of homogenous hardware that is providing on-demand compute and storage technologies for companies to build and run software on. The beauty of that is the customer only pays for the amount of compute and storage that it actually uses, whereas in an on-premise environment you have to pay for the cooling, the heating, and so on, 24/7/365.
With PaaS, the stack is a little bit more controlled by the vendor, who usually dictates which database technology and middleware components are used. It’s a predefined set of tools that the customer uses to build a software application. An example is Twilio
Lallos: You found that industry estimates for the shift to the cloud in PaaS and IaaS are probably too conservative.