cloud software programme tivit

Strategic Research Agenda 2.0 Cloud Software Program 1

Cloud Software Program

Strategic Research Agenda (SRA)

for Finnish Software Industry

(Edited by Veikko Seppänen, Tommi Mikkonen and Pasi Tyrväinen)

TIVIT Cloud Software Program

(ICT SHOK)

Tivit, Yritysten tutkimus- ja kehittämisrahoitus,

Päätös 424/10, 07.05.2010, Dnro 2902/31/2009 www.cloudsoftwareprogram.fi

www.tivit.fi

This work was supported by TEKES as part of the Cloud Software Program of

TIVIT (Finnish Strategic Centre for Science, Technology and Innovation in the field of ICT).

http://www.cloudsoftwareprogram.fi/

http://www.tivit.fi/


Contents

Executive summary ................................................................................. 4

Revisiting SRA 2009 ................................................................................ 6

Global trends .......................................................................................... 7

Technology development ........................................................................................................ 7

Technologies and emerging ecosystems ....................................................................... 7

Role of open source solutions .......................................................................................... 10

HTML5 everywhere .............................................................................................................. 10

Proprietary versus open Web ........................................................................................... 11

Disruptive innovations ........................................................................................................... 13

Browser as a universal application or platform ........................................................ 13

Wide-spread adoption of mobile wallet........................................................................ 14

Data enrichment ................................................................................................................... 14

Cloud-based data stores .................................................................................................... 15

Potentially unanticipated events and surprises ............................................................ 15

Cloud as the state-of-practice almost overnight ...................................................... 16

Saturation of community Web solutions ..................................................................... 16

Rapid consolidation of mobile ecosystems ................................................................. 16

Software development challenges ................................................................................. 16

Areas of competitive advantages ...................................................................................... 17

Understanding the sources of value .......................................................... 18

Characterization of the current software markets ...................................................... 18

Global market and its relevance to the cloud business ......................................... 19

Value creation ............................................................................................................................ 23

Value creation in cloud business models ..................................................................... 23

Application product suppliers and service providers .............................................. 24

Communication service providers .................................................................................. 25

Platform-as-a-service providers ..................................................................................... 25

Infrastructure-as-a-service providers .......................................................................... 26

Multiple kinds of brokers ................................................................................................... 26

Cloud users ............................................................................................................................. 26

In-house developers and IT development services ................................................ 26

Strategic challenges and opportunities ...................................................... 27

Accelerating the change of the software industry ...................................................... 27

Emphasis to building software-based ecosystems .................................................. 27

Holistic process improvement for operational excellence ..................................... 27

Application platforms .......................................................................................................... 27

Software engineering in and for cloud services ........................................................ 28


Opportunities and challenges .............................................................................................. 28

Computing and data centers ............................................................................................ 28

Small application and game provider community ................................................... 28

Web as the platform ............................................................................................................ 29

Brokering.................................................................................................................................. 29

Hybrid and virtual private cloud support ..................................................................... 29

Video services ........................................................................................................................ 29

Service store capabilities ................................................................................................... 29

Disruption-tolerant cloud ................................................................................................... 30

Ecosystems of development tools and stores ........................................................... 30

New communication means .............................................................................................. 30

User-driven business ideas ............................................................................................... 30

Creation of new niche ecosystems ................................................................................ 30

Agile development and lean enterprises – cloud software factory ................... 30

New research openings 2012-2017 .................................................................................. 31


Executive summary

The cloud paradigm is constantly evolving and it will further change the way

how software is being utilized. For this reason it will provide entirely new opportunities to software, application and service firms. Many new cloud

solutions are indeed emerging to be applied by businesses and used by individuals.

The scope of applications will be expanded from serving core business

processes to an order of magnitude wider domain, including especially many small applications which could not provide a basis for profitable software

business during the packaged software era.

The availability of a scalable cloud infrastructure will provide not only platforms but also application components for developers, often with a fraction of the

cost and very little upfront investments. Moreover, enterprise networking facilities, including trust management, are needed. The small threshold for

setting up and delivering secure cloud-enabled services will encourage small

businesses and thus increase the total volume of available services, also as building blocks for other systems and solutions. This enables new kind

innovations and out-of-the box thinking also in many existing businesses. A possibly disruptive consequence related to this is the potentially pivotal role of

some small players entering into focal positions in ecosystems that used to be dominated by bigger players.

Agility in service creation and software development will lead to shorter cycles

from ideas to actual profits. However, to make full use of the key cloud enablers, lean approaches need to be adopted and new technologies, methods

and tools taken into use. Furthermore, to be able to enter value creating ecosystems companies need consider what to offer to other participants, be it

a new technology, application, or some other valuable outcome.

Operational excellence continues thus to be important, when aiming at value

creation and capture in cloud-enabled networks and faster returns of investments, especially when the forming of such networks is just underway.

In practice this means visibility throughout cloud service development and close relationships between the focal company and its suppliers, customers and

other stakeholders. Effective business processes and models are needed to facilitate cloud transformation and implementation not only in small

companies, but also in well-established and bigger enterprises. How to make this happen needs to be investigated, understood, and supported.


Strategic research in cloud the software domain includes the following key

areas: Shortening the cycle from ideas to cloud service implementations to

sales and profits, making use of emerging business models, agile

application development and management processes, and scalable cloud infrastructure solutions by

o preparing organizations to identify new opportunities, establish new cloud-enabled business models, and create new cloud

applications using agile and lean methods, o equipping with or developing tools and techniques to create and

deploy new products and services for the cloud, and o making it safe, effective and scalable to launch, deploy and operate

cloud services in the Web. Exploring and utilizing competitive advantages to identify and grow cloud

business ideas and solutions, and identify best earning logic, by o making use of the existing skills, but also acquiring and adopting

new competences and entering into new network positions, o making explicit and supporting the key drivers of growth in regard

to cloud opportunities, be it technology-driven, application-based

or network-enabled, and o understanding the needs of cloud users, keeping in mind the

reshaping of many value networks around end-users. Ensuring the availability and scalability of the cloud infrastructure, by

o developing, evaluating and exploiting open cloud solutions, o making use of and affecting on the harmonization and

standardization of key cloud interfaces, and o implementing integrated security and trust management solutions

for the cloud. Developing cloud-enabled ecosystems and associated tools, by

o ensuring the necessary competences in companies to create and adopt cloud-enabled ecosystems,

o developing and adopting cloud-based tools for enterprise networks, o extending agile and lean practices and the use of enterprise

networking facilities to the ecosystem level, and

o building security, trust management and regulatory aspects into the emerging cloud-enabled ecosystems.

Ensuring effective software development and business processes to facilitate cloud transformation and implementation not only in small

companies, but also in well-established and bigger enterprises.


Revisiting SRA 2009

In this section, we shall revisit some of the main assumptions identified in

Cloud SW-SRA 1.0. The main statements and assumptions were as follows: • Increasing role of service businesses,

• Paramount growth of cloud computing (even if not explicitly stated), • From agile development to lean organization as the de-facto approach,

• Green IT making it big in a few years’ time, • No service to succeed without superior UX and flawless security, and

• Breakthroughs to be possible only by combining the above elements.

These assumptions have evolved in the following manner, based on the work performed in the Cloud SW consortium:

• Increasing role of service businesses • The role of service business has grown during the period, many of

the organizations are complementing the existing business with service ecosystems, the most advanced have sustained

proprietary, closed cloud service ecosystem support (cf. Microsoft,

Google, Apple). • Paramount growth of cloud computing (even if not explicitly stated)

• Currently dominant proprietary cloud ecosystem designs are emerging to increasingly open cloud ecosystems, building on open

source software and open interfaces. • From agile development to lean organization in software

• This trend has even gotten stronger during the last two years, and it is maybe best visible in Nokia’s shift to focus to Windows instead

of Symbian. The whole development mode supports the shift to the new ecosystem.

• Green IT making it big in a few years’ time • At the moment the big green trend is not directly visible.

• No service succeeds without superior UX and flawless security • Superior UX has been a key differentiation factor, but security,

trust and regulation aspects are not yet included in cloud solutions

as key factors. • Breakthroughs are possible only by combining the above elements,

• Currently there is no conclusive evidence to demonstrate this in practice.

In this revised SRA, the following key topics are visible:

The role of ecosystems is brought to the front. The ways to build sustainable and scalable ecosystems and how to find feasible positions

for smaller firms need to be elaborated.


Breakthrough of Web-related technologies and facilities (e.g., HTML5 and

cloud computing) has reached the main stream and is becoming the de facto implementation approach even in other than pure browser-based

applications (so-called hybrid applications).

In the long run, players in cloud ecosystems need to revise their access control mechanisms to allow addressing of trust and regulatory aspects

in the ecosystem activities in a sustainable way. Agility has become important in software development and is visible in

business processes, too. Cycle times for introducing new services have reduced and are becoming an essential competing factor. Cloud-based

enterprise networking facilities and agile, lean methods need however to be extended to the ecosystem level.

Global trends In this section we will revisit some of the global trends that were identified in

Cloud SW-SRA 1.0. As the starting point, we accept the already identified trends: on-going globalization, user experience, the importance of the Web as

a communication platform, and stabilization of the main ecosystems.

Technology development

In this subsection, we will address the most important technology-related trends of the global software industry that have recently emerged. However,

the view taken to them is the domestic Finnish perspective.

Technologies and emerging ecosystems

One of the most obvious changes in the field of software since the composition of the Cloud SW-SRA 1.0 is the forming of ecosystem silos, inside each of

which users as well as developers are bound to certain technologies, services, and tools. While these may be freely available, the silos create boundaries

that are difficult to cross. One may not be able to leave a silo because the data related to the service remains as the property of the service provider. Another

visible trend is that the services associated with the silos are converging, and most likely in the end the same set of services will be available in all of them.

The most important vendor-based silos, or ecosystems for that matter, and the associated technologies are discussed below.

Apple. Apple is starting to offer a cloud service that users can deploy to access the same content from different devices. Furthermore, the service

is associated with numerous features, such as those previously

associated only with Apple’s AppStore. This may make the system even more attractive than the plain data storage cloud would be. At present it

is open how Apple’s iCloud will be utilized in the long run.


However, at very least rumors exist that it would be in the future used as

a platform for building a cloud-based mobile phone. Apple’s position is further backed by the fact that its application market hosts by far the

biggest number of mobile applications.

Google. Available already at the time of the composition of Cloud SW-SRA 1.0, Google’s services including email, calendar, office appliances

and software development facilities have been available for almost half a decade, although they have earlier played minor role for Google’s

revenue compared to the search-based advertising. In addition, Google offers the Android platform that is an open source operating system for

mobile devices. Within few years, the platform has become the most widely used smart-phone operating system, and since the acquisition of

Motorola Mobile by Google during August 2011, questions about the openness of the platform have been raised. However, even with the

present Android, it has been clear that the intention is the creation of a mobile solution that fits with Google’s own services.

Microsoft. The alliance of Microsoft and Nokia, announced in February 2011, created a third ecosystem for mobile development. While still

unclear how the different details will turn out, there is a huge potential in

the development of applications that combine mobile and desktop services created for Windows and to be integrated with the Web.

In addition to the above mentioned and already established ecosystems, there

are some other that have shown potential, but not yet reached their full maturity. In the following, a few of them are briefly addressed:

Facebook. In the advent of the rumored Facebook mobile phone (http://www.wired.com/gadgetlab/2011/07/htc-status-facebook-

phone/), the company remains a service provider building on its own cloud computing facilities. It follows the open source strategy for its

datacenter software and hardware needs. However, provided with tight integration to its facilities, such a device could enable the creation of yet

another ecosystem. Facebook has also brought the concept of open source to data center design with their Open Compute project

(http://opencompute.org/). As data center design has previously been

mostly proprietary, it is interesting to see how Open Compute will change the solutions and the competitive landscape in the coming years.

Amazon. Amazon’s EC2 seems to be the most commonly used cloud computing infrastructure, to the extent that it can be considered as the

de-facto implementation of cloud computing. It has various closed and open source offerings mimicking its interfaces, but the service is still

based on providing computing infrastructure as a service (IaaS), on top of which e.g. Linux distributions can be installed. However, there is a

potential to extend it into a full-blown ecosystem, if so desired, with such PaaS offerings as cloud storage, databases and content distribution.

http://www.wired.com/gadgetlab/2011/07/htc-status-facebook-phone/

http://www.wired.com/gadgetlab/2011/07/htc-status-facebook-phone/

http://opencompute.org/


Amazon is mostly using proprietary technologies, but there are open

source alternatives such as Eucalyptus that implement similar sets of features and APIs.

VMWare. While Amazon is the focal company in the Java oriented open

cloud world, the Hypervisor centric virtualization solutions are the dominating trend in the incumbent corporations developing in-house

cloud solutions. In this arena VMWare owned by EMC is in a key position and will be with the large installed base in the near term future.

Rackspace. One of the smaller IaaS players is Rackspace that is differentiating from Amazon by following the open source strategy in

their cloud solution. The company is one of the main sponsors of the OpenStack (http://www.openstack.org/) IaaS offering, trying to leverage

the open source approach to competing e.g. with Amazon's EC2.

The fashion how the different systems have been composed remain largely hidden from a casual user. However, it is obvious that some vendors rely

extensively on the use of open source software in their service implementation. Moreover, harmonization and standardization of the key interfaces of cloud

solutions should in more general terms affect widely across market segments.

Centralized trust

The emergence of cloud computing has made trust boundaries increasingly

complex. Identities on Web services are often linked to Google or Facebook accounts or Apple ID's, and the services are identified with SSL certificates

provided by certificate authorities. Breaches into these trusted parties have occurred, e.g., in the recent Comodo, DigiNotar and RSA cases, and resulted in

further security and privacy breaches to users that had placed trust on them.

The current trust models place near complete trust in a handful of providers, such as SSL certificate authorities or such major cloud vendors as Apple and

Google. The recent breaches have shown that this trust is sometimes misplaced. More distributed models exist, but they are often complex and

difficult to understand and manage, in practice. A breakthrough in

understandable, manageable and distributed trust would be a major enabler for emerging cloud businesses.

Also the incidents that have taken place indicate the same, that there is a need

for dependable, distributed trust mechanisms that need to be both understandable and secure. Improvements on this area will lead to:

new business opportunities for technology providers, enhanced security as one of the key enablers for services with high

privacy, and special requirements set by certain application domains of the cloud,

such as health-care, to be addressed.

http://www.openstack.org/


Role of open source solutions

While it is unclear how some of the above companies have implemented their proprietary applications and services, one of the striking trends of the latest

years is the ever-increasing importance of open source systems. The trend seems to be that when a successful piece of proprietary software is created, its

functions are rapidly imitated by open source systems offering almost the same functionality. This is often the strategy employed by smaller companies

trying to enter a market dominated by a large company with its proprietary software. The consequences of this transformation are many.

To begin with, it is now easy to gather components that can be used as a basis

of almost any system, ranging from very small embedded devices (embedded Linux) to full-fledged cloud computing system (OpenStack, OpenCloud). A

related, yet often overlooked issue is that in order to avoid a single

implementation lock-in, at least de-facto open standard interfaces are a necessity for the option to change the implementation on the fly. Since open

source implementations are often composed from developers’ own perspective, compatibility problems may emerge even between the different versions of the

same system, not to mention situations when a new system is taken in use.

Somewhat surprisingly, the rules of the open source world are not that different from proprietary implementations. It is considered to be rather easy

to compose a running system out of readily available open source components. However, problems commonly emerge as one realizes that the composition of

the components leads to the constant need to upgrade some of the components. This has resulted in packaging of open source components into

“Enterprise edition” versions that are a bundle of open source components with such added value as support contracts, cf. for example the Eucalyptus cloud

computing platform.

In the end, it may be necessary to invest a big effort in maintaining a

particular configuration for a single business over an extended period of time. Consequently, in addition to using open source software in the composition of

the first system version, it is increasingly tempting to participate in the community producing maintained stable configurations. Examples include Linux

distributions, Qt variants, Linux desktops, and so forth.

HTML5 everywhere

The forthcoming HTML5 standard complements the capabilities of the existing

HTML standard with numerous new features. Although HTML5 is a general-

purpose web standard, many of the new features aims squarely at making the Web a better place for desktop-style Web applications. There are numerous

additions when compared to the earlier versions of the HTML specification.


To begin with, the new standard will extend the set of available markup tags

with important new elements. These make it possible for example to embed audio and video directly into Web pages, eliminating the need to use such

plug-in components as Flash for this kind of media. The standard will also

introduce various new interfaces and APIs available for JavaScript applications.

Conformance to HTML5 has been one of the most important drivers to competition among browser manufacturers, in addition to the raw performance

of some parts – and JavaScript in particular – of the browsers. Furthermore, the discontinuity of previous Microsoft technologies, such as SilverLight, that

are based on proprietary design, only makes the competition more intense. Consequently, the realm of HTML5 is expected to extend from that of the

browser and Web as such towards many kinds of applications. This in turn requires an increased understanding on how to mix technologies originating

from the Web with those that are commonly used for composing binary applications. The same discussion holds for methods used in the development.

Many of the present software development methods have been largely irrelevant in Web development, where instead more informal approaches have

been common: if things render correctly in different browsers, the system is

released. Due to the good recovery capabilities of browsers it is however common that Web applications include many resident errors.

The growing importance of HTML5 will also mean an increasing role of the

rendering capabilities of the browser. Since the Webkit browser seems to be the de-facto implementation used in many contexts, detailed knowledge on its

internals will become necessary. The same holds also for other open source browsers, including the Mozilla code base. For companies relying on

proprietary browsers, such as Microsoft’s Explorer, the ability to use its capabilities in different applications outside the Web content will be important.

Time-to-market and efficiency in the cloud

The importance of reducing time-to-market and increasing efficiency will, if

possible, be even higher for the cloud than earlier. This includes development,

validation and launching of cloud applications, and not only from the viewpoint of the process, but regarding organizations and business networks as a whole.

Proprietary versus open Web

Given that the majority of useful information is available on the Web, for many people the browser has become the most commonly needed computer program

that they use. Therefore, although the browser was not originally designed to be a software platform, the Web has become increasingly important as a

deployment environment for various types of applications.


In other words, systems that previously required substantial investments or

distribution costs are increasingly available as services on the Web. However, the use of the Web as a software platform has many facets. At least the

following categories of Web-related applications exist:

Browser-based systems are pure Web-based software that require nothing more than a standard browser to run, using only those

capabilities that are offered by such browsers.

Custom runtimes assume a special runtime environment, such as

Microsoft's Common Language Runtime (for Microsoft Silverlight) or the Java Runtime Environment, for application execution. Applications are

run outside the browser.

Plug-in based systems refer to hybrid solutions in which a custom

runtime is made available using a browser plug-in.

Custom-built native "apps" are not really Web applications at all.

However, they use the same network protocols to access the back-end services as the browser does. By using native graphics libraries, the

look-and-feel of such applications can be customized specifically to the needs of the application and the device. The applications can also

leverage device-specific features more comprehensively than a pure Web

application. Furthermore, it is possible to use HTML5 and other browser technologies for rendering as well, provided that a suitable graphics

object (e.g. webView or similar) is available in the widget library.

Mozilla recently published their Manifesto that centers around the idea that the Web is a global public resource to remain open, accessible, interoperable and

secure. The Web must be built around public and open standards, rather than proprietary technologies that serve specific business interests. Following these

principles, Web applications should be built around technologies that are open, accessible and as interoperable as possible. Out of the application

development technologies discussed above, the only category that fulfills the promise of truly open Web applications are the browser-based systems, i.e.

applications that require nothing more than a standard Web browser to run. However, in more general terms cloud evolution will require and benefit from

standardizing technology, application and service interfaces.

All the other approaches fail to deliver the true flexibility of the Web as an

application platform, e.g., by relying proprietary technologies, additional plugin components or custom runtimes. For obvious reasons there are still numerous

challenges in the near term in moving towards truly open Web applications. For instance, the evolution of the browser itself is progressing rather slowly, so

many of the APIs needed for developing comprehensive applications simply are not available yet. In addition, native applications can offer considerable gains

in terms of performance, usability and API coverage in the short term. Furthermore, the use of the Web in mobile devices poses special challenges.


Disruptive innovations

Disruptive innovations tend at first to enter low-end market niches, then evolve to satisfy main market needs and ultimately take over the market as

the new dominating approach. Many examples from the history of innovations demonstrate this evolution, such as 8” disks taking over 11” disk storages,

cameras in phones competing against specialized camera equipment, etc.

As the technology will be developed faster than the user requirements grow, the disruptive inferior technology will eventually match the needs of the

mainstream users with less cost to the previous technology generation. This in

turn will direct majority of the technology development to the disruptive technology. Cloud-based applications can be viewed as a disruptive innovation

in this regard, thinking for example g-mail and Google docs with their limited functionality, but satisfying the needs of millions of low-end users, most of

whom could not afford acquiring the old dominant solution targeted to professional users. Cloud can also change the basic logic of other areas than

software industry. In particular, cloud as a comprehensive, scalable and secure infrastructure has a potential to cause changes in many service businesses.

Browser as a universal application or platform

The rapid breakthrough of mobile apps – small applications that can be loaded to mobile devices and that are free or cost very little in comparison to

traditional applications – have become commonplace at a speed and volume that has been astonishing. While such applications have been available for

download, with OpenBit from Finland paving the way on its own behalf, Apple was the first to make appstore a success story. Since then, almost all other

mobile device vendors have introduced similar facilities. In reality, though, a large number of the applications are not really new as applications, but the

question is to provide simply an easier or more attractive way to make use of existing applications as mobile services.

At the same time, the most popular applications in appstores have sometimes

been made available in multiple appstores and as a browser application, too. For example, Angry Birds is available at http://chrome.angrybirds.com.

Despite the success of mobile apps, there are recent claims regarding the

decreasing need for separate platforms, because the Web browser increasingly satisfies the needs of both developers and users. The introduction of a

universal "platform application" that would combine everything that developers and users would needs into a single system, could definitely be a major

disruptive innovation.

http://chrome.angrybirds.com/


While cloud computing has become a common technology in desktop

computing, the first announcements to use the same technologies in other contexts have also been made. For instance Huawei has announced their goal

to build a cloud phone (http://www.chinadaily.com.cn/cndy/2011-

08/01/content_13019663.htm). We believe that the same trend will continue and that there will be more and more embedded devices to benefit from a

common "platform application" for cloud computing, with the associated cloud infrastructure, service integration and development tools.

Wide-spread adoption of mobile wallet

Micropayment is a financial transaction involving a very small sum of money

and occurring usually online. The practical challenge associated with micropayments is that the costs associated with individual transactions must

be small in order to make every transaction count. While they have not

received much attention by the wider public, micropayments have been available for some time and offered by such service providers as PayPal, as

well as by various mobile phone and credit card operators. The rapid advance in this field makes it possible to adopt new business models, where the value

of an individual purchase is only few cents although the margin for the payment operator is extremely small per purchase requiring huge volumes of

transactions to be feasible.

Upon integrating the facilities associated with micropayments to mobile phones and mobility in general, even more attractive possibilities will emerge. The so-

called mobile wallet is applicable in a lot wider fashion than for instance credit cards due to the fact that mobile phones are being deployed very widely

indeed. The mobile wallet is also applicable in developing countries, where ordinary credit cards are beyond reach due to the costs associated with the

necessary infrastructure.

Moreover, traditional currencies will be challenged by virtual currencies related

to the emerging mobile and Web ecosystems. As an example, several game producers already accept internal virtual money so that it is exchangeable with

main stream currencies. It could be argued that in the future this type of global virtual currencies emerge and may cause a disruption, bearing also

remarkable societal implications.

Data enrichment

The raise of data analysis needs has opened new areas for business. For

example social network providers have access to vast amounts of data that can

be analyzed to estimate things like hit movies or the popularity of different mobile phone brands among consumers at large.

http://www.chinadaily.com.cn/cndy/2011-08/01/content_13019663.htm

http://www.chinadaily.com.cn/cndy/2011-08/01/content_13019663.htm


The computing infrastructures needed to investigate big unstructured data

masses have also made it possible for such new systems to appear, including in particular Hadoop.

Hadoop was initially designed as an open source clone of the Google MapReduce parallel programming framework. In a nutshell, it consist of a

highly scalable non-POSIX file system HDFS and the MapReduce parallel data processing framework. Hadoop is extensively used in production by Yahoo!,

Facebook, and Twitter. It is being commercialized by Cloudera, Hortonworks (a Yahoo! spin-off), IBM, and EMC (Greenplum HD/MapR), and is running on

more than 100 000 servers worldwide.

One of the main attractions seems to be the cheap price per terabyte of the HDFS storage on commodity PC hardware, compared to traditional SAN/NAS

storage solutions. The CEO of Hortonworks has claimed that half of the world’s data will be stored in Apache Hadoop within five years.

Cloud-based data stores

Another disruptive innovation is the emergence of cloud based data stores.

These are sometimes called No-SQL databases, but the terminology is quickly changing as the SQL query language question is not really the most relevant in

the discussion. Cloud-based data stores are, simplifying, a bunch of technologies grouped together to differentiate them from traditional relational

databases. First there are key-value stores that allow extremely scalable storage of binary blob data, a prime example of this being the Apache

Cassandra system. Google has a system called Megastore that allows efficient geographic replication of data, while still being tailored for interactive

applications. Both systems can be used as data store back-ends for large-scale Web applications, allowing for the consolidation of such applications.

Another branch are systems like Apache HBase tailored for massive batch processing jobs, and allowing for easy integration with MapReduce based data

analysis pipelines. Also systems like MongoDB are used in a smaller scale, because of the ease of use for programmers developing Web applications,

while still enjoying some scalability benefits. What is common to all these systems is that they are highly scalable, making it possible to generate data

storage back-ends for software services that can be deployed in the Web.

Potentially unanticipated events and surprises

As evolution in software development has been progressing rapidly, it is obvious that there have been quite a number of surprises, too. Some of the

them have been much unanticipated, while other represent simply rapid break-through of solutions that have already been available, but in a small scale.


Cloud as the state-of-practice almost overnight

One tends to overestimate or underestimate the time needed for a new technology to mature. With cloud technologies the former is definitely the

case, because cloud computing has become the business as usual, at very least when considering the level of computing power available in the cloud. At

the same time, however, for instance effective means to build high-end cloud data centers remain to be resolved. There are also numerous other challenges

to tackle, such as interoperability between different clouds and security.

Saturation of community Web solutions

One of the most popular services – if not the most popular – of the Web with

its more than 750 million users, the number of Facebook users is still growing. However, for the first time there are also some signs that the number of its

users may be stagnating. At present it is still too early to state whether or not the stagnation of largest-scale community Web services is plausible, but it is

clear that such would lead to the fragmentation of user bases and markets.

Rapid consolidation of mobile ecosystems

A major unanticipated event would be the rapid consolidation of mobile

ecosystems. Motorola Mobile was acquired by Google. A major rationale for the acquisition may have been Motorola’s patent portfolio and its manufacturing

will continue as a separate activity. However, the acquisition also signals that mobile ecosystems are facing a remarkable transition period

(http://techcrunch.com/2011/08/15/breaking-google-buys-motorola-for-12-5-billion/). Nokia and Microsoft formed an alliance to compete against Apple and

Google not only with regard to operating systems and mobile devices, but also in mobile apps (http://www.microsoft.com/presspass/press/2011/feb11/02-

11partnership.mspx). We expect that even further consolidation and surprises will be seen. Furthermore, as already demonstrated by Huawei by its cloud

phone, innovations may increasingly arise from the Far East - in part based on the sole size and growth of the Asian market.

Software development challenges

Despite the increasing interest in cloud computing and the facilities of the Web,

software developers remain rather hesitant in adopting new methods and tools in use. The mainstream approaches used in software development are still the

same that have been there for the past many years, including requirements management and version management systems, bug reporting databases, and

automated build and testing facilities.

http://techcrunch.com/2011/08/15/breaking-google-buys-motorola-for-12-5-billion/

http://techcrunch.com/2011/08/15/breaking-google-buys-motorola-for-12-5-billion/

http://www.microsoft.com/presspass/press/2011/feb11/02-11partnership.mspx

http://www.microsoft.com/presspass/press/2011/feb11/02-11partnership.mspx


Although these would be residing in the cloud, they would remain non-

integrated and used as separate applications, each of which somewhere in the Web. In other words, not that much efforts have been placed to integrate

them into something that would lead to better communication among

developers, easier access to information, and in general a faster and more flexible and robust approach to develop software. Even team-level agility is not

enough, but agile and lean enterprises must be built and that needs special skills, knowledge and expertise on agile and lean transformation. This can be

considered software development as service in the cloud and for the cloud.

Areas of competitive advantages

There are two megatrends in the domain of cloud software that pose challenges to the software industry: increasing speed of changes in the global

business environment, and continuing cost-benefit needs posed by lower-cost software development companies of countries in Asia, Middle-East, Africa and

elsewhere. Such companies have an increasing capability of building high-quality software. There is no other choice than to be competitive and

productive enough at the level of the enterprise as a whole an in the relevant

ecosystems. This can provide benefits that are not achieved by simply having lower hourly software development costs.

Furthermore, there is more evidence available that companies should not

outsource their critical development activities, or too much of their operations, without losing their competitiveness. At the same time the trend of using

more and more software everywhere is continuing. In particular, almost every business is becoming software-driven. so that its capability to quickly and cost-

efficiently transform innovations and new technologies into profits is based on software. The needs for speed, agility and cost-effectiveness have thus rapidly

increased, and the trend is continuing. No one can survive in this kind of environment with the old ways of developing software. Even team-level agility

is not enough, but agile and lean enterprises must be built.

Moreover, companies need to make good decisions on how to combine external

and in-house software assets to create innovative new solutions. Reducing the time it takes to move from an idea to the market and profits is becoming

increasingly critical, even at the expense of the provided feature set.

Software industry benefits directly from investments in the education provided by universities and polytechnics. In Finland this has resulted not only into

such enterprise-scale success stories as Nokia, but has also produced a lively sector of small and medium-sized companies, not to mention such open source

innovations as Linux and MySQL, the latter two being sources for significant commercial businesses as well.


In addition to the engineering excellence, Finland is also known from a long

tradition of interest in and adoption of software development methods, tools and processes. This has benefitted companies in quality improvement and

software engineering practices. However, these have to be combined with

capabilities to develop new products and services, as well as to create new businesses and ecosystems. Overall, the ongoing trends will intensify the

competition in a significant way. At the moment it seems unlikely that the Finnish software companies could challenge such global players as Google or

Amazon, not at least with the same service concepts as these companies are offering. It seems more likely that in order to be competitive, Finnish software

companies should have their own individual and imaginative service mix that would build on both engineering, operational and business excellence, and

address "niche-enough" market segments to start with. Success stories like Angry Birds can follow.

Understanding the sources of value

In this section, we will address the issue of value creation in the future cloud

software businesses. Thereby we also make an attempt to evaluate and justify, where the future business opportunities would lie.

Characterization of the current software markets

The annual sales of software products by the primary software industry is around 200 M€ and the sales of IT services is over 400 M€, including software

development and integration services, as well as process and technology consulting (Source: Datamonitor 2009). Most of this revenue comes from

business customers and the public sector. In addition, individual end-users

have increasingly started to pay for software and software-based services. Firms in the secondary software industry represent some 40% of the developer

headcount in Finland (Source: ETLA) and 60% (Source: EU) in Europe. They develop software embedded in services and products, such as search and

advertisement, wireless equipment, outsourced business processes (cf. accounting through the Web as an example), and games. Both enterprises and

individual end-users consume services provided by these firms.

Software product businesses focus on their market share in the visible software market, as well as try to find and reach new markets. The cloud

approach in general and the software-as-service delivery concept have been used for this purpose. Already well-established software companies tend to

focus on improving their internal operations, trying to reduce their software development costs by the means of outsourcing, improving in-house processes

and reusing existing software in the form of components, reference products,

applets, mash-ups and open source programs (see Figure A).


Figure A. Software development based businesses.

There are however no silver bullets for identifying new software-based

business opportunities, because the potential markets are so vast. One of the two megatrends stemming already from the early days of computing is that

the number of users is approaching infinite, taking especially the future ubiquitous smart environment into account. Moreover, as their role is

reshaping towards producers, it will become necessary to reconsider the value creating business networks also what is shown in Figure A, to better and faster

grasp the opportunities related to end-users acting as prosumers.

The other obvious megatrend is that the price of a piece of software per use is not only approaching zero, but in some cases becoming negative. This means

that software is given for free to the users or that they are paid to deploy it as a value carrier for other offerings. In many cases, however, software

development costs and usage fees are simply invisible, because they are embedded in services and products.

In the future it may become even more difficult to cash directly from a piece of software, as opposed to capturing the software value from successful service

or product delivery and deployment. As depicted in the figure, this tends to cause pressures to the value creation phase to decrease costs and thereby

increase the value capture marginal on the delivery side.

Global market and its relevance to the cloud business

The main sectors of the global ICT market are depicted in Table A.


Table A. Main sectors of the global ICT market1).

Sector Size Annual growth

SW Industry 229 Mrd$ (2010) 3.1%

IT Services and SW 625 Mrd€ 1.0%

Telecommunications 1 400 Mrd€ 2.9%

Internet Marketing Add-based services

(Global Marketing ~400 Mrd)

30-35 Mrd$ (09) ~20%

Games 42 Mrd$ (07) 10%

Music & Movies 66 Mrd$ (10) 1%

1) Embedded software is included in the Telecommunications sector. Other industrial sectors in

which embedded software is developed are not included because of the lack of uniform data.

The main segments have not been radically changed during the past years,

except perhaps the role of Internet-based marketing that illustrates the penetration of Web-based electronic commerce from business customers to

consumers. In terms of the size it is still an emerging segment. Computer games have become one of the core software business segments, something

that was envisioned several years ago, but did not happen then. Games also illustrate the power of global branding, comparably to the best-known

examples from the early software product era. This has become even more pervasive due to the Internet, social media regarding opportunities to make

use of the brand globally that were not available to the manufacturers earlier.

As can be seen from the table, the IT and SW and telecommunications

industries are large and mature, with only modest growth figures. Some other industries re at the same time growing much faster and have already reached

a significant size, taking also room from the already more "traditional" digital businesses, such as the music industry. In Finland, the total size of the IT

industry in 2010 was 7-2 Billion euros, with 54 400 employees working for it. The amount of software revenue and service revenue related to software in

2010 was estimated to be 3.2 Billion euros, with 5.0% of yearly growth (Source: Software industry survey 2011). From the point of view of individual

companies, the global figures of the industrial segments and their growth rates are only showing that there are significant opportunities available and also

several new areas of growth.

A high-level model on how business opportunities are developed from their recognition to successful implementation can be depicted as in Figure B.


Figure B. Evolution from market needs to successful business.

Evolution starts from evaluating an opportunity that can be either an

imprecisely defined market need or represent the case of non-employed or under-employed resources or capabilities. The evaluation of the opportunity

focuses on the question, whether the identified market need or resource availability is sufficiently sized and significant, and if the company's capabilities

fit with the opportunity characteristics better than existing configurations.

Thinking of the cloud-enabled opportunities as a whole, it has been recently estimated that the cloud will replace the personal computer “as the center of

users' digital lives” already by 2014 (Source: Gartner 2012). This view illustrates the depth of the change that is ongoing regarding the present era of

software industry and software-based industrial and consumer applications.

A business concept is used to define the core notions on how the market need is addressed or the company's resources can be deployed. It grows further

into a full-blown business model that includes not only the business concept, but also a financial model estimating the value created and its distribution

between the company, its customers, suppliers and other partners.

How this kind of evolution becomes a part of a relevant value creation and capture network, and what is the position of an individual company or its

business in such a network may, however, be more important. The roles of

software businesses in value networks and ecosystems are changing, as already indicated above.

Some software businesses are, however, still following the traditional business

models and value networks (Figure C), where applications and enabling infrastructures are separated, as well as development, integration and service

provisioning types of businesses. Other businesses already forming entirely new value networks (Figure D), based heavily on placing the end-users onto

the top of and pulling software offerings together into services so that former developer and integrator businesses are adjacent to the value network core,

rather than located in the core any more.

Market Needs, Non- or under-employed Resources

Business Concepts

Business Plans

Businesses Formed

Successful

Enterprises


Figure C. Former business roles (Source: Messerschmitt & Szyperski 2001).

Figure D. Roles of businesses in the emerging cloud software industry. One

firm may operate in multiple roles. Yellow arrows represent 24/7 services, blue arrows off-line transactions.

How the emerging value network evolution might shape the roles of cloud

software players in terms of value creation is discussed in more details next.

UseAnalysis & design

Analysis

& design

Implementation

Implementation Provisioning

ProvisioningOperation

Operation

APPLICATION

INFRASTRUCTURE

Industry

consultant

Application

SW supplier

Infrastructure

SW supplier

Business consultant

System

integrator

Infrastructure

service provider

Application

service provider

End-user organization

Information

content

supplier


Value creation

Emerging opportunities for innovation and value-creating roles can be identified, for example as follows: service-based business models, such as Web

as the platform, cloud-capable mobile applications, and mashups; acceleration of the ecosystem transition of incumbent businesses; and reference/proof-of-

concept of implementations, as well as establishment of new ecosystems.

Value creation in cloud business models

The core logic of business is that companies create value for their customers and try to capture value for themselves in return. This ability to create and

capture value forms a basis for competitive advantage and success of companies. For practical business, the value creation concept has one

important implication, which relates to how the value of product and services are determined. Usually the valuation of offering is too much product -centric

and focusing on technological aspects. However, the offering by itself does not create value, but the value is created when customers use or consume it. The

basic logic of value creation can be designed and expressed in the form of business model. A simple way to crystallize business model is through the

kinds of elements shown in Figure E.

Figure E. Value creation logic (Source: Ahokangas & Myllykoski 2011).

It is important to understand how value is created through business models. For example, superior utilization of cloud technologies does not by itself

guarantee success. It is the ability to create value for or with customers that really determines it, and to do it better than competitors from the customers’

perspective. When utilizing cloud the entire relationship with customers typically changes.


This leads to a need for new resources, capabilities and processes, too. Also

the revenue logic may change radically, because the cloud can provide opportunities for innovative revenue generation. Moreover, the nature of

competition as a whole is changing. There will be more and more competition

between ecosystems rather than between individual firms. Customer value is created through a set of complementing products, services and processes from

multiple players of the same value creation network.

Application product suppliers and service providers

Application product suppliers have traditionally gained their revenue from selling packaged shrink-wrapped products sold through retail channels, value-

added resellers and more recently trough Web stores. Most of the revenue has become from the first sale, while upgrades and maintenance fees have formed

around 20% of it, and training has been provided as an additional service. The

changing the role application product suppliers to act as of software-as-a-service (SaaS) suppliers affect software businesses in many ways:

Revenue can be converted to monthly recurring revenue providing delayed but predictable and steadily increasing income stream. This may

even double the valuation of the firm. Market share and customer base will remain critical. Marketing and sales

costs will remain or increase to form even one half of the revenue. Automation of software delivery reduces upgrading and versioning costs.

Use of Infrastructure-as-a-Service (IaaS) enables cost-efficient scalability of the infrastructure needed for providing SaaS, as well as

improves the global availability of the offering. Providing applications as a service reduces the risk of piracy, increasing

thereby revenue streams. Automation of the application providers’ processes will become a must.

Current professional applications can be sold to new low-end market

segments, because of the less expensive SaaS solutions or services with revenue coming only from advertising.

It will be profitable to produce and deliver smaller applications than what has been feasible in the case of packaged software.

Application stores and Web distribution are low-cost delivery channels. About one half of the current software application market is expected to

be delivered as a service after a few years, yielding to a global market of approximately 100 Billion euros.

Business users in mature markets prefer predictable rental models to pay-per-use models.

Large enterprises prefer purchasing SaaS applications into intranet due to the better cost structure and security, to provide a single point of

service, and to reduce maintenance costs, but with the cost of minimized customizability.


Communication service providers

Communication service providers (CSPs, telecom operators) are adopting the role of brokering and bundling both infrastructure and application services to

individual and enterprise customers: CSPs with processes to the market, deliver and charge small services

have the competences, reliability, brand and infrastructure needed to act as distributors. The possibility to charge monthly billions of customers is

a great competitive advantage in most markets. Large-scale adoption of digital wallets may, however, reduce this benefit soon.

Margins of CSPs and other channels are reducing, maybe below 15%. CSPs can integrate services to packages, as well as provide on-line help

and scalable security solutions. Individual CSPs have a challenge to be attractive delivery channels for

SaaS developers due to smaller customer reach than such global firms

as Apple, if the SaaS provider has to tailor or integrate the service to each CSP. Standardization may help in this, unless the market becomes

too fragmented for it.

Platform-as-a-service providers

Traditional operating system vendors and other platform development

companies are transforming into Platform-as-a-service (PaaS) providers. Also CSPs and some new entrants have already adopted this role. PaaS operate on

markets, where they need to attract both application providers developing new applications and customers willing to use and buy these applications:

PaaS is a focal role in an ecosystem providing high risk and high market

opportunity. It is usually a horizontal role, but the platform can also be specific to a niche market, due to the market segment needs, regulation

requirements, or alike. Potential players include vertically integrated global firms (Apple, Google,

Microsoft), global niche players (Force.com, Tier-1 CSPs), market / geographical / regulation niches (Tier-2 CSPs, potentially also some

Finnish software firms), open source communities, and tool platforms. The PaaS field will remain as a battle-field of fierce market share

competition with some of the current top players remaining and a couple of new major PaaS providers appearing.

Tool providers on the net are emerging and will decrease the threshold to develop and manage new service applications, thereby increasing their

visibility and overall role. Platform providers will have fierce fights over winning the best

application developers, who appreciate ease of use, one-stop-shop

service and large potential customer base. The market volume of the PaaS businesses is easily hidden in vertically

integrated firms, but was expected to be round $1-2 Billion in 2009.


Infrastructure-as-a-service providers

Infrastructure-as-a-service (IaaS) offers added value for its customers by providing on-demand computing and data storage capacity.

Multiple kinds of brokers

Governance and integration of on-demand services in user organizations

requires tools and service processes. IT service firms can adopt this role by providing governance brokering as a service. Brokers can also provide

integration of multiple services into one-stop-shopping service bundles or

integrated services. Platform providers are also natural-born brokers. Free infrastructure can be monetized by lending it, using infrastructure brokers.

Cloud users

According to Gartner’s very recent (2012) analysis the cloud will result in a

radical change from the viewpoint of individual users, and thereby open many new opportunities to businesses: “Every user can now have a scalable and

nearly infinite set of resources available for whatever they need to do.” Although also technological and infrastructure changes will be remarkable, the

sole availability of the cloud to the masses of users – but for each and every

one as an individual, will create entirely new types of benefits.

Overall, the volume of users' activities based on the cloud will grow a lot, and the users can be more self-reliant “than ever before.” They can make their own

choices regarding cloud services, applications, and content “from a nearly limitless collection on the Internet.” This should create a totally new culture of

self-service “that users expect in all aspects of their digital experience.” In other words, the users can create and make use of their digital personalities

online, in the cloud.

In-house developers and IT development services

Large firms will still maintain in-house software developer pools and use IT

services for supporting their business opportunities: Standard products do not provide competitive advantage.

Integration will still be a critical issue in fine-tuning processes. Security and governance are easier to order from within the firm.

Continuous agile development is cost-efficient with in-house resources. Private and hybrid cloud approaches will be needed.


Strategic challenges and opportunities

This section outlines the main challenges and opportunities that arise from the

emerging cloud context, as it has been reviewed above.

Accelerating the change of the software industry

Based on the overall trends, the following recommendations can be made, that

if taken into account, would help the industry in their way towards competitive edge of cloud-based business.

Emphasis to building software-based ecosystems

Ecosystems and ecosystem-based thinking are the indispensable ingredient of

cloud-based business models. In a way, this can be seen as a culmination and intensification of the movement in the industry from products towards

services, a movement that has been distinctive feature of the whole era from the year 2000 onwards.

Holistic process improvement for operational excellence

Both business and software development take place in networked ecosystems

of many actors, and advanced means are needed to tackle this complexity. Sustaining world-class competitiveness requires a rigorous and holistic strategy

that encompasses the whole organization. Lean enterprise level thinking is an encouraging approach towards this direction. Innovation can, however, take

place at many levels, such as products, services, processes, and the way of working. The key is therefore to involve everybody in the organization in

reaching operational excellence.

Application platforms

In order for the industry to succeed, companies must participate in the building

of new and innovative application platforms, either for existing ecosystems or

with the intention to create totally new value creation networks.

Building of cloud-based application platforms with all the needed services is far from trivial. At the moment there are not many first-hand research results

available on this, regarding especially empirical studies, and therefore more work is clearly needed.


Software engineering in and for cloud services

Related to the application platforms, software engineering related research is needed regarding both the use and building of cloud services (i.e. in the cloud

and for the cloud). Moving a majority of the tool support into the cloud can bring remarkable benefits, too. It is therefore useful to consider software

development tools as potentially very important cloud applications.

Software development teams can benefit from having integrated tools in the cloud for example by avoiding the trap of multiple and differing installations of

toolsets. Teams using agile practices can benefit for example from having cloud-based continuous integration means in their use when they need them

most. Software development related data can reside in the cloud and thereby be collected and utilized in a very effective manner for project management

and process improvement needs.

It must also be noted that moving towards cloud based software engineering is

altogether a formidable task for the software industry. Especially established players need to invest in due time in making the paradigm change to happen

in practice and remain competitive. The cloud transformation will be more pervasive and deeper than just improving the process to the next quality level.

In essence, if the software development and management process is ineffective, the cloud transformation is in danger – cloud is software, after all.

Opportunities and challenges

The following opportunities and challenges can be foreseen, based on what has

been said above.

Computing and data centers

One of the implications of the work carried out in the Cloud Software program

is that competence on IaaS services needs to be strengthened, and more communication capacity to main markets is needed. Finland still lacks its own

ultra-high-speed connections to the rest of the world.

Small application and game provider community

On-demand infrastructure and the availability of open source software and PaaS services have minimized the threshold to create small applications and

investment needed to start new businesses. Global reach of application stores and the piracy protective nature of on-demand applications make it easier to

deliver and sell small applications.


The success of software game firms should attract the attention new talents,

investors and facilitator organizations. An implication resulting from this is the importance of new venture support, along with support to new businesses in

more general terms. Market success may, however, be difficult due to

unexpected customer behavior and the dominance of large players in the existing markets.

Web as the platform

Platform functionality and development tools will become available, because many Web services do not require an special installation efforts. Fast

application development needs are constantly increasing, and therefore also a race on winning tools is going on. For example graphic-intensive or multimedia

applications may, however, not be suitable for the Web-based environment.

Brokering

Governance and integration of on-demand services in user organizations require tools or services. Brokering systems and services are needed in many

places of the ecosystem, and therefore multiple business opportunities.

Hybrid and virtual private cloud support

Making use of the external capacity on demand is profitable for peak loads.

Hybrid and public cloud systems have security problems. Also selling free capacity to external users has security risks. Security solutions and brokering

services for hybrid, virtual private and sold capacity solutions will be needed for these reasons.

Video services

Capturing value on content has become difficult, but it is still possible to charge for video services and develop video service businesses further.

Service store capabilities

In addition to easy development and on-demand delivery, software businesses

need marketing and sales capabilities. One part of this is the use of stores or provisioning of service store capability by the firm itself. This includes

components, such as identification service, authentication, brokering, and payment. Not all these services are available at the moment. Development and

easy deployment of service store capabilities are therefore needed.


Disruption-tolerant cloud

Cloud services depend on network connections, and services can become unavailable without them. Development and easy deployment of disruption

tolerance capabilities and services are thus needed.

Ecosystems of development tools and stores

Platform functionality moves to the Web services used via browsers.

Developers wish to deliver and sell applications with the same environment. Integration of platforms, stores and development tools form strong integrated

cores for ecosystems. There is thus a need to integrate browser development,

store and platforms.

New communication means

Facebook has already replaced e-mail to some degree, as well as many

alternative instant messaging tools. Music and video-on-demand services have replaced stored media. New wireless devices are being adopted fast.

Integration of these all into new form factors and applications is going on, and identification of new communication applications provides opportunities.

User-driven business ideas

Community platforms provide common means for application distribution. Fast

development of new services emerging from user demands provides entirely new opportunities. Development of community applications provides a major

challenge, also with regard to the processes and tools, and taking the users themselves into the development process as prosumers rather than only

consumers.

Creation of new niche ecosystems

Software development becomes even more networked and will be operated in

ecosystems. Specific competences of a developer community may be utilized

best in growing ecosystems, which also utilize open source. Practices to develop cloud ecosystems need to be learned by the community.

Agile development and lean enterprises – cloud software factory

When looking for means to fight outsourcing and off-shoring, incumbent firms search cost effectiveness, transparency and cycle-time reduction from agile

development and lean enterprise concepts. Development and dissemination of agile and lean methods must be continued, towards the cloud software factory.


New research openings 2012-2017

From the business viewpoint the focus in the coming years should be in supporting a change towards smaller, leaner and more competitive

ecosystems, as well as growing the emerging ecosystems around mid-size enterprises. This can be catalyzed by business and ecosystem creation pilots.

On the other hand, surveys of existing systems, ecosystem assessments and

other similar initiatives need to be continued. Significant increase of interest ineffective building of software and software-based based ecosystems is

expected. The future of software development must not lie in the increase of

productivity per se, but in the cleverness of exploiting software assets that have business value.

Holistic process improvement and operational excellence-related initiatives can

be identified to sustain transparent asset development and deployment needs. The movement towards participating in and building of new application

platforms should be encouraged by the means of research. To accelerate this, further pilots are needed and should be extended across the domestic borders.

Services aimed at consumer markets are mainly based on viral marketing models. Research of these models and their application provides fresh

opportunities for revenue generation to software businesses. Research of cloud software will be focusing on following main areas and

themes during the next two years: Shortening the cycle from ideas to businesses in the cloud domain

(operational excellence, best practices), by preparing organizations to

the agile approach in identifying new business opportunities, software development and deployment activities; equipping with or developing

tools and techniques for the creation of new products and services in the cloud; and making it easy to develop, deploy, utilize and manage

business and ecosystem operations through cloud-supported services. Developing cloud-enabled ecosystems and associated tools, by creating

competence for the firms to create and adapt to cloud-enabled ecosystems; developing and adopting cloud-based tools for enterprise

networks; and extending agile and lean practices to the ecosystem level. Exploring the competitive advantages of firms to create and grow cloud

business ideas and actual businesses, by making use of new ideas, natural strengths, existing and acquired or developed new competences

and networks of the firms; and utilizing existing competences to create new key technologies for the cloud environment.

Fulfilling requirements for superior user experience, by understanding

and making use of the kinds of experiences that are necessary to secure key positions among cloud users and seamless multi-service access to

delightful and dynamic features in cloud services.


Enabling ecosystems to address the trust management challenges of the

new era. Following, making use and affecting the emerging harmonization and

standardization of cloud technology, application and service interfaces –

including not only cloud solution development, but also content creation for and usage through the cloud.

Assessing and advancing the strategic positioning of cloud-enabled businesses in terms of the ecosystem roles: developers of the cloud

(offerings created for the cloud), adopters of the cloud (offerings that come with or through the cloud), and users of the cloud (offerings that

are created by using the cloud). In practice, this would thus mean creating new or transforming existing offerings to cloud services,

changing the delivery channels of existing or new offerings to the cloud, and making use of the cloud in developing new or existing offerings.

Advancing further the innovative and business-driven way of carrying out research and development work, as practiced in the Cloud Software

program. Finally, the increasing turbulence in the global business environment and

the continuing challenge posed by lower-cost software development

countries must be taken seriously enough. Here the role played by the lean enterprise approach will be very important.

cloud software programme tivit

Technology

cloud services

software engineering

cloud users

softwarebased ecosystems

cloud business models

current software markets

strategic challenges

cloudbased data stores