In Quest’s previous Business Technology blog post, I shared a few initial thoughts gleaned from recent research that we commissioned with Forrester Consulting. In sum, leaders most satisfied with the return on cloud investments (ROI) are moving quickly to hybrid clouds.

ROI Leaders Already Run a Majority of Core Business Applications In Hybrid Clouds

On-premises deployment’s share of the hybrid portfolio will continue to shrink. Among organizations highly satisfied with the value of their hybrid deployments, only one third of core business applications today run on-premises. In only two years, on-premises deployments will drop to just over a quarter.

Strategic Preferences Vary by the Type of Application

Although the overall business application portfolio will move steadily to the cloud, deployment strategy is forming differently, depending on the category of application, differing in the kind of environment in which the business applications run.

Compared with today’s situation, some kinds of on-premises core business management software applications will be run more commonly as software as a service (SaaS). Some other kinds of core business management software applications will be run more commonly on public infrastructure and platform clouds.

Core business applications will be found on public cloud platforms and SaaS. The share of core business applications running on external private clouds will stay where it is today.

We asked survey respondents about their deployment situation and plans for several categories of core business applications. What follows below in this article focuses on the most notable results out of longer lists of data points.

Public Cloud Platforms Will Decline in Preference for Operations Systems

Public cloud platforms are widely touted by a wide range of service providers. Anecdotally, I have heard that many companies see this today as a prime option for reducing software operations costs.

Today, financial management applications are run on public cloud environments in two thirds of high-ROI firms surveyed. More than half of respondents also run their supply chain applications on public cloud environments.

What’s next for public clouds? In the next two years, high-ROI hybrid cloud leaders expect to move more of their Governance, Risk, and Compliance (GRC) applications from corporate data centers to public clouds, an increase of almost 10 percentage points.

However, leaders who report being highly satisfied with the value of their hybrid cloud investments are already thinking of migrating some of their application deployments from public clouds to Software as a Service (SaaS). For example, respondents expect to migrate many of their Supply Chain Management (SCM) and Financial Management Systems (FMS) to SaaS. Financials on public infrastructure clouds will drop from two thirds today to less than half in only two years.

Software as a Service Will Be Adopted Even More for Operations Systems

For ROI leaders today, financial management systems are the least likely of applications to be delivered via SaaS. However, in two years, 70% of surveyed firms report they will run these applications as SaaS — a shift of 21 percentage points. Supply Chain and Manufacturing applications round out the list of top migration preferences for core business applications.

Anecdotally, we at Quest have heard in customer conversations that a key factor in the growth of SaaS is the expanding functional depth that SaaS venders are delivering, making it more viable (though not necessarily less costly) to move from traditional software to SaaS.  

Learn More, Do More

In my next blog post about what ROI leaders in hybrid cloud environments do differently, I will share with you research data showing the top challenges faced by ROI leaders while running core business applications in a hybrid cloud environment.

Learn more in “Gain Agility While Mitigating Risk Through Hybrid Cloud,” a custom Technology Adoption Profile commissioned by Quest International Users Group with Forrester Consulting. Paid Quest members can access this new Forrester research within Quest’s new “Strategize and Act” Business Technology Content Center on Questdirect.org.
 
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