The cloud is becoming exactly what it sought to replace

In the cloud, the new school has become the old school
Credit: Corbis

Cloud providers once promised to be different from traditional enterprise software providers. Here's why that didn't happen

I remember the pitch: Cloud computing (called on-demand at the time) was the alternative to traditional enterprise software. You purchased cloud services using an on-demand or subscription model, you paid for only what you used, and you owned no hardware or software. What could be better?

Ten years later, cloud providers are becoming "enterprise-y" in their behavior -- more like the very traditional enterprise providers they were supposed to differ from.

Many cloud providers are behaving like traditional enterprise software providers: selling multiyear agreements, having their customers sign closed agreements, and even selling maintenance and support.

Some of this is not the fault of the cloud providers, but of the enterprises themselves. They are asking for deep discounts, and to fund the discounts, the cloud providers need those larger commitments.

But market forces also come into play: Many cloud providers are now large, publicly traded companies, so recurring revenue is a big deal for their stockholders -- and that pushes traditional enterprise software approaches.

Moreover, the executives at cloud providers in many cases come from the traditional software world -- more reason why cloud providers seem to be acting increasingly like traditional software providers.

Of course, cloud providers don't require that you purchase hardware or software, so the lack of capital expenses required is still a compelling reason to use the cloud. But for many, hardware and software costs are not a big deal -- licensing, maintenance, support, and management are, and that's where cloud providers are getting all enterprise-y.

I can't help but miss the hungry new cloud providers of those early days. They sold cloud technology as "game-changing," pointing out that the days of traditional enterprise software were numbered. A decade later, the game hasn't changed; only the providers playing it have.

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