Yesterday Gartner issued their annual Magic Quadrant for Application Platform as a Service (PaaS). They positioned Microsoft and Salesforce.com in the leader’s quadrant.
Although this is obviously a big topic, with many variables, I wanted to share my thoughts on the Application Platform as a Service (PaaS) market, specifically focused on Microsoft vs Salesforce.com.
Firstly, I strongly believe the future of application development / hosting is in the cloud. I’m confident that on-premise and hybrid-cloud will remain in existence for many years, but I ultimately see these implementations becoming niche.
Although there are many enablers to cloud adoption, I certainly see I/PaaS being key. In this new world, I believe Google, Amazon, Microsoft and Salesforce.com are best equipped to deliver for enterprise customers. Without a significant market shift, I don’t hold much hope for SAP, Oracle, IBM, who I predict will (over many years) be relegated to specific verticals or product-lines.
The only other interesting player is Pivotal. I remain impressed by their architecture and strategy, as instead of attempting to compete with Google, Microsoft, Amazon and Salesforce.com, they have chosen to make them a commodity, by abstracting their PaaS (Cloud Foundry) via a technology called Bosh. This is smart, as Cloud Foundry can exist everywhere, regardless of the underlying infrastructure. In this world, Cloud Foundry could become the new “Microsoft Windows”, allowing Pivotal to sell services around the underlying platform.
Enterprise Heritage - Windows, Windows Server and Office are entrenched in almost every business, therefore Microsoft have a powerful foundation to build on. Combined with their experience working with large enterprises, they should be able to continue to drive growth, especially with customers that lack strategic direction (Microsoft, like IBM in the past, remain a safe bet).
On-Premise + Cloud - Microsoft maybe the only player to have a viable on-premise + cloud story, with the ability to drive interesting hybrid options. Knowing the market share of Windows, Windows Server and SharePoint, Microsoft can look to extend these services into the cloud, providing customers a bridge from “old” to “new”. In certain scenarios this option could be appealing, however in most cases this is actually just moving the problem. For example, taking a legacy application stack and moving it to the cloud is not a long-term answer (it simply buys you some time). You can obviously re-architect/build in the Microsoft cloud, but this neutralizes the main value proposition.
Developer Experience - Microsoft are known for delivering a fantastic developer experience across their ecosystem. Tools such as Visual Studio and their developer documentation are always very comprehensive, with many reusable patterns and active support communities. Historically, the main challenge has been that these resources were focused exclusively on the Microsoft eco-system, however this is slowly changing with their new open mindset (see the next point).
Open - Microsoft have historically focused on proprietary services, with their goal to promote their own platforms (e.g. Windows) and sell through licensing. This model is no longer viable and under Satya Nadella we’ve seen Microsoft embrace open. Examples are .Net, SQL Server, Visual Studio Code, Xamarin and even Windows, which now natively supports the Bash environment. Unfortunately, the road from proprietary to open is not short and there is certainly a difference between running “Hello World” and a production-ready, secure, resilient and scalable application. At this time, I’ve not spoken to anyone (including Microsoft) who has confidently stated that Microsoft services are ready to run in production, on open platforms. As a result, I believe we are still years away from the maturity of other open-community environments.
Strategic Direction / Ecosystem - In the past three years alone Microsoft have changed their mission and vision statement three times. They have covered everything from consumer to business and software to devices. In my opinion they simply lost their way, unable to decide if they want to be like Apple, IBM or something in between. This lack of direction resulted in some interesting decisions (e.g. Windows 8, Nokia), but also damaged the eco-system and developer community. At the past two BUILD conferences, Microsoft have attempted to repair the damage by positioning the Universal Windows Platform (UWP), which also includes a number of bridges for Web, iOS and Android developers. The goal was to deliver a next generation application architecture, as well as win back some of the community they had lost. I believe the architecture is sound, but unfortunately the ecosystem is not growing the way Microsoft had hoped, this has not been helped by another recent change in direction, where a number of the bridges were retired or re-written (further damaging the relationship with the developer community).
Summary - Although Microsoft has had a rough few years (known disappointments include: Windows 8, Windows Phone Hardware, Universal Windows Platform, Windows Phone OS, Nokia, Surface, Xbox One, Microsoft Band, Kinect, Skype – to name a few). I believe Azure and Office365 remain incredibly powerful assets. I also believe that under the leadership of Satya Nadella and their new “open philosophy”, they will emerge as one of the top cloud application development / hosting players. What is currently unclear is if they can win back the developer community and make the Universal Windows Platform a viable option (especially for the enterprise). Finally, I think the biggest barrier to success for Microsoft will not be the competition, but instead their own ability to execute. If the last three years is evidence, they have been unable to focus the company on a single vision, resulting in continued miss-steps, lost momentum and brand damage with their most loyal customers.
Cloud Only / API-First - Unlike most legacy players (Microsoft, SAP, Oracle), Salesforce.com was born in the cloud. Without the anchor of on-premise, Salesforce.com can innovate at a quicker rate then the competition (recognized by Forbes for the past five years), something that is very difficult to compete against. The fact that they also pioneered “API-Centric Architecture” (alongside Amazon) shows that they clearly understand the importance of having world-class technical expertise, with a proven ability to execute. Their API-First mentality is the envy of many companies, with Microsoft and others spending a huge amount of time modernizing their legacy stack in an attempt to follow an API-First approach. The advantage for the likes of Salesforce.com and Amazon is that API-First is part of the company’s culture, while legacy players must attempt to transform their organizations (something that many will not achieve).
Customer-Centric - A key part of the Salesforce.com marketing is the “Customer-Centric” tag line. Although some of this is clearly just good marketing, I do believe there is truth in the statement. For example, Salesforce.com have continued to aggressively grow their product portfolio (often through acquisition). However, when you analyze this growth, you’re able to quickly identify a common theme… The Customer. It’s my belief that Salesforce.com want to own the customer lifecycle, from Apps, CRM, Service, Marketing, Analytics, IoT to E-Commerce. Their most recent acquisition (Demandware) continues this trend, with an important step into E-Commerce. What I like about this strategy is that it’s clear, bold and aggressive, which (if successful) will make Salesforce.com a powerful player anytime you’re dealing with a customer (delivering a true 360degree view). If you compare this with Microsoft (echoing my comments above), they have also made bold acquisitions (e.g. Nokia), but often without the same clarity of vision and lack of customer focus.
Strategic Direction / Ecosystem - As previously stated, Salesforce.com have a clear vision and a powerful product portfolio. If they can integrate these capabilities successfully it presents a very exciting opportunity for application development. For example, it’s easy to see how data flowing through these services (via multiple digital channels), could deliver a customer relationship that is on equal terms, one that is personalized, always available and always up to date. I can’t think of another technology company (including Microsoft) that have this potential (based on their current product portfolio). Another important note is the focus we’ve seen from Salesforce.com on developer experience, an area where Microsoft have always been strong. The introduction of Trailhead has been a phenomenal success and the AppExchange continues to grow, with the introduction of Lightning Components, alongside traditional applications. The continued investment in these services demonstrates their commitment to developer experience, but also highlights their unique approach to implementation.
Licensing - I continue to believe the biggest weakness for Salesforce.com is their licensing. Although the Force.com architecture offers many advantages, the multi-tenant nature of the platform makes clean separation of applications difficult to define. As a result, Salesforce.com have chosen to follow a “per user” license model, which unfortunately doesn’t offer the same economies of scale for enterprise customers, when compared with a more traditional application development / hosting architecture. I see this as a significant barrier, one that they must overcome to see continued growth. I do however believe there is some light at the end of the tunnel, as in recent weeks we have started to see their plan to bring Force.com and Heroku closer together. We’ve also seen them sign a strategic deal with Amazon, something that I believe is designed to help them scale (affordably) Force.com and Heroku. Unfortunately, these are major changes, which will likely take many years to deliver tangible value.
Summary - At this time, I believe Salesforce.com continue to be on a positive trajectory. They certainly have their share of challenges (integrating Marketing Cloud and now Demandware), as well as maturing the new Lightning architecture. However, I think these are good problems to have, as the outcome (if successful) presents a huge opportunity for them and us. I also remain impressed with their architecture, technical expertise, culture and approach. Regardless of their growth, they appear to stay true to their values and focus on strong customer relationships. Finally, I believe with the recent acquisition of Demandware, they now have the end-to-end customer lifecycle covered, which again presents interesting opportunities.