Cloud computing is big business. According to Bessemer Venture Partners (BVP), a Boston-based venture capital firm, the world’s top public cloud computing companies are now worth a combined market value of over $100 million. To celebrate this milestone, BVP announced the creation of its own cloud computing index, which will track the weekly fluctuations of leading public cloud computing companies.
To create the index, BVP decided to include only publicly traded companies. In a blog post explaining the firm’s methodology, partner Byron Deeter and associate Kristina Shen explained that it was not easy for BVP to “draw a clean line between the cloud ‘haves’ and ‘have nots.’” The venture capital firm included businesses that run on multi-tenant, subscription models as well as “hybrids,” which use web-hosted, single-tenant models that still charge a subscription. Deeter and Shen stressed that the methodology will be refined and evolve over time.
Readers will instantly recognize some of the names on the list, such as LinkedIn, Salesforce.com, Workday and NetSuite. However, other companies that made the grade might come as a surprise. For example, BVP included Athenahealth, a cloud-based service that offers electronic health records to doctors and hospitals.
Although Deeter and Shen declared that “the cloud computing industry has now officially come of age,” a July 2013 report by analyst firm Gartner noted that spending on cloud technologies in 2013 will make up only 2% of the amount businesses will spend on IT overall. Although many enterprises are gradually shifting towards cloud computing, companies still exhibit wariness when it comes to this technology. A June 2013 IDG Enterprise report stated that security concerns are one of the biggest barriers to adopting cloud computing.
However, in spite of the current spending figures on the cloud, analysts expect enterprise spending on cloud computing to increase. In February 2013, Gartner released a report that forecasts public cloud adoption will grow in the enterprise. The report’s authors expect spending on public cloud services to reach a compound annual growth rate of 17.7% between 2011 and 2016.
In order to heighten their profiles and gain both customers and broad acceptance in the enterprise, cloud computing service providers will need to offer aggressive service level agreements and prove their reliability to clients. Concerns about security will be a major barrier for the cloud computing industry to overcome. Cloud service providers will need to convince the enterprise that the cloud is a safe and affordable technology appropriate for all businesses if they want to earn a spot on BVP’s index.