research paper and ppt on on 5 conference papers-cloud computing in software development

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plications development. But cloud computing as an applications devel- opment platform did not occur overnight. The evolution occurred gradually as the cloud service ven- dors began opening up their pro- prietary infrastructures to third- party software engineers who wanted to build new applications and use tools or services specific to those hosting environments.a

There were also network effects as- sociated with this gradual transition that made the new development envi- ronments increasingly popular and valuable: As more tools and services as well as third-party applications be-

a This column extends an earlier discussion in Michael A. Cusumano, “The Evolution of Cloud Computing into a New Type of Innova- tion Platform,” in A. Boes and B. Langes, Die Cloud und der digitale Umbruch in Wirtshaft und Arbeit [Cloud and the Digital Revolution of Work and Economy], Haufe Group, Germany, 2019.

S I N C E T H E E A R L Y 2000s, ad- vances in networks and vir- tualization technology have made Web delivery of software applications pos-

sible on different types of hardware and software. As a result, we have seen increasing use of Internet or “cloud-based” servers as the primary way organizations and individuals use software applications (see “Cloud Computing and SaaS as New Comput- ing Platforms,” Communications, April 2010). Many software developers have continued to build applications using hardware-based operating sys- tems. Today, however, the trend is clear that cloud-based services have become a new platform not only for using software applications but also for building them.

In addition to hardware-based op- erating systems such as Google An- droid, Microsoft Windows, Apple’s

iOS, and Linux, now we must include Amazon Web Services (launched in 2006, initially to sell Amazon’s ex- cess computing and storage capaci- ty), the Google Cloud and App En- gine (launched in 2008), and Microsoft’s Azure (launched in 2010) as popular platforms for ap-

Technology Strategy and Management The Cloud as an Innovation Platform for Software Development How cloud computing became a platform.

DOI:10.1145/3357222 Michael A. Cusumano

The trend is clear that cloud-based services have become a new platform not only for using software applications but also for building them.

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AWS was particularly attractive be- cause it was not tied to a single prod- uct and was especially good for devel- oping online retailing applications. Amazon also made several critical ser- vices available to its cloud users, in- cluding data storage, computing in- frastructure, messaging, content management, and customer billing. In recent years, AWS has expanded to include computing resources (EC2 for virtual servers and Lamda for running code); database, data storage, and content delivery services; networking administration and security services; code deployment facilities; analytics, application, and mobile support ser- vices; and a growing number of enter- prise applications.c

Microsoft in 2019 offered a similar collection of tools and services for its

c See https://aws.amazon.com/products/ ?nc2=h_ql_prod.

came available, more application de- velopers chose to build new software for specific Web environments, which led the platform owners and third- parties to make more tools, services, and applications available. Much like the app stores for smartphone soft- ware, Amazon, Microsoft, and Google, as well as other firms, now boast app stores for their cloud-based applica- tions and development tools.b

An early movement toward using Web environments for applications development came from companies that delivered software products as a service. In particular, Salesforce.com, founded in 1999, created a customer relationship management (CRM) product configured not as packaged

b See https://aws.amazon.com/marketplace/help; https://azuremarketplace.microsoft.com/ en-us/marketplace/; and https://cloud.google. com/marketplace/.

software but as software delivered over its own servers and accessed through a customer’s browser. In 2005, Salesforce launched a website called AppExchange that functioned as a transaction platform and online store for companies to share, buy, and sell applications or tools that work particularly well with the Salesforce CRM product. Salesforce then created an innovation platform when it launched Force.com in 2008 as a devel- opment and deployment environment using Salesforce’s SaaS server infra- structure and growing set of software engineering tools.

Various companies would go on to offer other public hosting services for SaaS products but Amazon quickly became the market leader for hosting as well as Web-based applications de- velopment. It had over 400,000 devel- opers registered as early as 2008 to use Amazon Web Services (AWS).6

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ity to run different applications in a soft- ware environment that emulates differ- ent hardware platforms), data storage, and networking.9

The total size of the information technology market in 2018, including software, hardware, and services, was estimated to be approximately $3 tril- lion.2 Cloud revenues remained a rel- atively small part of this total number but were growing 20% to 30% annual- ly: SaaS revenues in 2018 were esti- mated at over $55 billion; IaaS reve- nues approximately $45 billion; and PaaS revenues just under $11 billion. Public cloud services cut across all three categories, with AWS by far the market leader in recent years. Gartner and Goldman Sachs put AWS’s mid- 2019 market share at 47%, followed by Microsoft (22%), Alibaba (8%), and Google (7%).8

Among these companies, Micro- soft’s Web business was growing the fastest. We can expect further growth but also intensifying vendor competi- tion between Microsoft and Amazon, especially for enterprise users. Both companies offer the most popular cloud platforms and marketplaces for software development as well as powerful IaaS platforms for running those applications. There is now little doubt that Microsoft—which made its fortune from packaged versions of Windows and Office—has successfully made a transition in its business model from desktop software to the cloud.

References 1. Amin, A. Google’s Market Share in the Cloud Space

Has Increased. Marketrealist.com, February 2019. 2. Bartels, A. Global Tech Market Will Grow By 4% in 2018,

Reaching $3 Trillion. Forbes.com, October 18, 2017. 3. Carr, A. and Bass, D. The Nadellaissance. Bloomberg

Businessweek, May 6, 2019. 4. Coles, C. AWS vs. Azure vs. Google Cloud Market

Share 2017. Skyhighnetworks.com, March 5, 2018. 5. Dignan, L. Microsoft Q4 Strong as Commercial Cloud

Revenue Hits $6.9 Billion. ZDNet.com, July 19, 2018. 6. Malik, O. Amazon Cuts Prices on S3. Gigaom.com.

October 9, 2008. 7. Novenet, J. Amazon lost cloud market share to

Microsoft in the fourth quarter: Keybanc. CNBC.com, January 12, 2018.

8. Stalcup, K. AWS vs. Azure vs. Google Cloud Market Share 2019: What the Latest Data Shows, ParkMyCloud.com, April 30, 2019.

9. Watts, S. SaaS vs. PaaS vs. Iaas: What’s the difference and how to choose. BMC.com, September 22, 2017.

Michael A. Cusumano ([email protected]) is a professor at the MIT Sloan School of Management doing research on computing platforms for business and coauthor of The Business of Platforms: Strategy in the Age of Digital Competition, Innovation, and Power (Harper Business, 2019).

Copyright held by author.

hosting service users and application developers. Its shift to the cloud began in 2010, when Microsoft began to offer Azure as an online service consisting mainly of Windows Live and Office Live. Azure initially appeared to be a weak competitor to Amazon and Google because of Microsoft’s strong preference for the packaged software business model. That preference gradually changed as increasing num- bers of Microsoft customers asked for software delivered as a service and preferred to pay via short-term licenses and annual subscriptions.d

Google was an early innovator in Web services but lost ground to Ama- zon and Microsoft probably because it lacked the experience, and the strategy, to sell services to enterpris- es. Most of what Google offers its us- ers (except advertisers) it offers for free. However, this may change in the future. Google is now spending bil- lions of dollars to upgrade its cloud infrastructure and marketing efforts, with the intention of attracting more enterprise users for its services.1

As we look back, though, it is Mi- crosoft that most stands out for its successful shift in strategy under CEO Satya Nadella that led the com- pany to repackage many of its key software products and development tools as online services.3 For exam- ple, Azure made available all the ser- vices that had been ported to the on- line versions of Windows and Office as well as Microsoft SQL Server, Mi- crosoft CRM, .NET services, and Sharepoint services. These Web offer- ings made it possible for customers to continue using Microsoft’s prod- ucts as Web services rather than buy new versions of the packaged soft- ware. At the same time, Microsoft en- abled its customers to integrate Mi- crosoft services with products from other vendors, thereby positioning Azure as a relatively neutral hosting environment and innovation plat- form. On Azure, software engineers can use various programming lan- guages and not just Microsoft’s pro- prietary .NET environment.

Microsoft’s cloud revenues have continued to rise as customers built

d See https://azure.microsoft.com/en-us/overview/ what-is-azure/.

new applications using the Azure Web services and ran them on the Azure platform rather than on Windows. Mi- crosoft lumps several cloud services together, but one estimate is that, in fiscal 2018, Microsoft had revenues of approximately $23 billion from Azure out of total company revenues of $110 billion. The Azure business in 2018 and 2019 was also growing at annual rates between 70% and 90%.5,8 This growth has helped propel Microsoft beyond Apple and Amazon to become the most valuable publicly listed com- pany in the world, with a market value over $1 trillion.

For the past 10 years or so, industry analysts have been tracking cloud soft- ware revenues in increasing detail, with annual reports on the different market segments. “Software as a Service” refers to software products delivered via the Web and priced generally on a subscrip- tion or on-demand basis, with the full applications stack and data running on the software company’s cloud servers. “Platform as a Service” (PaaS) refers to features that users access via the cloud while managing their own software ap- plications and data on internal (on- premises) company servers. These fea- tures include middleware applications, the operating system and updates, data storage, networking, and tools for devel- oping new applications. PaaS covers the new cloud-based innovation platforms. There is also “Infrastructure as a Ser- vice” (IaaS), which generally refers to when customers manage their own ap- plications, databases, middleware, and operating systems while receiving some basic services via the cloud. These other services include virtualization (the abil-

We can expect further growth but also intensifying vendor competition between Microsoft and Amazon, especially for enterprise users.

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