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Cloud 3.0: The Rise of Big Compute

The success of deep learning as the first Big Compute killer app signals an inflection toward exponentially greater use of large-scale, specialized computing.

As we have entered into 2017, the enterprise software industry is at the inflection point for ubiquitous cloud adoption as part of the $4 trillion dollar enterprise IT market transformation. The reasons for enterprise IT to adopt cloud are compelling, and many assume this shift has already happened.

We are, however, just at the very beginning of this shift and the impact is fundamentally transforming all elements of IT. Industry experts estimate we are in fact only at about 6% enterprise cloud penetration today.

Most businesses have yet to realize the full value of this transformation. It is clear that adoption of cloud in core business activities by enterprise hardware and software IT players strongly correlates with improved business performance and shareholder value.

For instance, if we look at market cap changes over the past 5 years, companies that have fully embraced cloud (Amazon [AMZN], Adobe [ADBE], Salesforce [CRM]) have seen great success.

Similarly, companies that have recently embraced cloud (Microsoft (MSFT)) are starting to see strong recent growth and those that have recently embraced cloud (Microsoft (MSFT)) are starting to see strong recent growth and those that have failed to embrace or execute on cloud (Oracle [ORCL], HP [HPQ], and IBM [IBM]) are struggling to build further business value.

To be sure, there are many other drivers for market cap growth in these companies, but level of cloud products, business models, and expertise has been a clear driving factor for success while cloud capability has now become table stakes for every enterprise software business.

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