Revenue growth. Business model diversity. Market innovation.
These are just a few of the traits that characterize the companies on the 2015 Talkin’ Cloud 100, Penton Technology’s fifth annual ranking of the information industry’s most noteworthy cloud service providers, brokerages, aggregators, managed service providers and VARs.
As we have for the past four years, the editors at Talkin’ Cloud have amassed a list of the industry’s 100 most influential cloud companies with ties to the channel. This year’s edition of the Talkin’ Cloud 100 underscores the flexibility and agility of cloud companies as they help give shape to the rapidly expanding market. This year, the companies that comprise the Talkin’ Cloud 100 list generated more than $30 billion in cloud services revenue, an increase of 28.6 percent over last year.
In addition to growing quickly, Talkin’ Cloud 100 companies are entering adjacent markets, disrupting existing business models, acquiring other companies, and delivering clever innovation to both consumers and business buyers alike, just to name a few things.
Fast Times in the Cloud Marketplace
At the top of the Talkin’ Cloud 100 list, big companies including Salesforce.com, Microsoft and Amazon Web Services (AWS) are delivering almost mind-boggling growth on a consistent basis. Ten-year old AWS, for example, totaled $4.6 billion in sales last year and is on track to reach $6.23 billion in 2015, according to the company.
Despite dozens of price cuts on services that routinely beat rates charged by rivals by 50 percent or more, AWS is profitable and expanding its services portfolio. Earlier this year, it unveiled AWS Marketplace for Desktop Apps, a new service that makes it easy for customers to find and buy applications for their Amazon WorkSpaces cloud-based desktops. More recently, it announced plans to expand deeper into India, make greater use of solar technology to power its offerings and provide cloud technology to prepare students for the cloud workforce. The new Amazon API Gateway will make it easier for AWS customers “to create, publish, maintain, monitor and secure APIs at any scale,” according to the company.
For these and a host of other reasons, AWS is arguably the most disruptive company on the Talkin’ Cloud 100 list for 2015. But it is hardly the only one helping to redefine the market.
Also enjoying a breakout year: cloud human resources software provider Workday. Its sales grew 68 percent to $787.9 million in 2014, and the company continues to enjoy strong growth in 2015 as business customers increasingly warm to cloud alternatives to traditional software licenses. For the quarter ended April 30, 2015, Workday sales jumped 57 percent to $251 million.
The rapid growth enjoyed by Talkin’ Cloud 100 companies is presenting them with new options and challenges. Take No. 52 on this year’ list, cloud marketplace platform provider AppDirect. It doubled its revenue for the fourth consecutive year last year, and announced in February that it secured an additional $50 million in funding thanks to its momentum. The money, the company said, will be put to use to help to expand AppDirect’s headcount by nearly a third, and scale its sales, marketing and customer service capabilities.
“We see massive opportunities in front of us and this additional funding will allow us to run at an accelerated growth rate,” AppDirect co-CEO Daniel Saks told Talkin' Cloud at the time.
M&A Activity Reshaping the Landscape
Another Talkin ‘Cloud CEO, David Northington of Cloud Sherpas, No. 56 on this year’s list, said growth is coming faster than expected to companies like his—both through acquisition (his company has completed seven at last count) and via organic expansion. “People assume that most of the growth has been achieved by buying businesses. But if you add up all the growth we got from those companies, it would add up to only $35 million-$40 million of trailing 12 months revenue. But our plan for this year is $176 million. And we are ahead of that. So you can see the vast majority of our growth is organic,” said Northington.
Like other companies, Cloud Sherpas has made international expansion a key priority. And while it never set out to make so many acquisitions, it continues to encounter a surprising number of good companies that are too good to pass up. So have others.
In fact, if you compare the 2015 Talkin ‘Cloud list to previous years, you will note that a number of companies have been snapped up by bigger organizations. Take one of cloud computing’s bright stars from last year’s Talkin’ Cloud 100 list, BUMI. In September, the premium MSP that specializes in online data backup and recovery was acquired by J2 Global, which is No. 13 on this year’s Talkin’ Cloud 100 list. Other Talkin’ Cloud 100 companies that have been acquired include Arkadin (bought by NTT), Claris Networks (TekLinks), Perspecsys (Blue Coat), TestudoData (Excel Micro) and Unified Technologies (DCSI).
Talkin’ Cloud newcomer StratoGen, meanwhile, was acquired by Access Group in December 2014, although it retains its brand and distinct focus on the mid-sized cloud hosting market. Underscoring the innovation and resourcefulness of the companies on this year’s Talkin’ Cloud 100 list, StratoGen was named the “Veeam Cloud Provider of the Year” at the VeeamON forum held in the London in June 2015.
New Faces, New Places
In addition to StratoGen, this year’s list boasts a number of new faces. HP made the list for the first time thanks to its broad portfolio and customer clout (not necessary its growth). Box, too, joined the list this year. And so did OneNeck IT Solutions, which, like many cloud services providers, is developing deep vertical market expertise in energy, healthcare and other fields, just to name a few.
Texas-based DoubleHorn, No. 91 on this year’s list, epitomizes the transition that a number of “trusted advisors” have made over the last decade. The company, which provides cloud IT, security and backup solutions, was formed 10 years ago in the state capital of Austin. Since then, it has refined its deliverables and, in more recent years, honed its cloud expertise to the point where it now offers clients “a simple six step Cloud Transformation Methodology” that it developed on its own. In January of this year, the State of Texas Department of Information Resources (DIR) tapped the company to deliver Cloud Assessment Services, Cloud Brokerage Services and Cloud Infrastructure as a Service (IaaS) to various state agencies. Later in July, the company announced that it had been selected by the State of Oklahoma to be its “Cloud Services” contractor. The deal solidifies the company’s status “as one of the leading cloud services companies in the Southern U.S.,” according to the company.
In addition to new companies, the Talkin’ Cloud 100 also recognizes new executive leadership at many organizations. This includes Rackspace, where CEO Taylor Rhodes has deftly navigated the company through some rough patches. He took over as CEO last year amid an ill-fated attempt to sell the company to new owners. Under pressure from AWS, the company broadened its portfolio of services and double-downed on key customers. The strategy reinvigorated Rackspace, which delivered a 30 percent jump in profits in the second quarter of this year. Among other things, the company has been positioned by Gartner in the “Magic Quadrant for Cloud-Enabled Managed Hosting” in both North America and Europe. Rackspace is now recognized to be among the “leaders” by the market research company.
New Ideas, Bold Approaches: XaaS, Security and Line of Business Buyers in the Spotlight
In addition to growth, vertical market specialization and deal making, Talkin’ Cloud 100 companies are embracing new business models, technological innovations and customers.
Companies including Cloudnexa, No. 98 on this year’s list, are redefining what it means to be a cloud services provider. Though the company has committed deeply to the AWS platform—it’s both an AWS Partner Network (APN) Premier Consulting Partner and an AWS Managed Service Partner—it recognizes the need to distinguish itself from others in the market who have done the same. To that end, Cloudnexa has developed its own cloud management tool, which it markets “vNOC.”
The company is just one of a number of “partner” companies that have invested in developing their own intellectual property. As more partner companies do, the distinction between developer, vendor, partner and provider becomes less meaningful or even apparent.
What is clear for 2015, however, is the number of companies that are redoubling their efforts in security and broadening their scope to sell to line-of-business buyers who work in marketing, sales, human resources and other functions in enterprises businesses worldwide.
As 2015 gives way to 2016, watch for these trends to continue.