The Commoditization of the Cloud: Tracking Progress of Microsoft and Its Dynamics Partners

When Holger Kisker, a principal analyst with Forrester in Cambridge, Mass., outlined his 10 Cloud Predictions For 2012 at the end of 2011, he pointed out that cloud infrastructure services are getting highly commoditized with increasing margin pressure year over year. All cloud vendors are trying to move up the value chain to deliver higher-value cloud services, Kisker pointed out.

A member of Forrester's Business Technology Futures team, Kisker painted a picture of a time when more software providers will incorporate cloud offerings - available on a hosted, subscription basis in a 24/7 format online - into their product lineups. "In 2012, you will see more and more infrastructure-as-a-service (IaaS) vendors offer technology platform services, platform vendors presenting software services, and applications vendors packaging business process services into their offerings," Kisker wrote in his blog.

Fast-forward to the present, and cloud-based supply chain software is particularly ripe for commoditization, according to Dwight Klappich, research vice president for Gartner, Inc., in Stamford, Conn. "Over time cloud will become commoditized when the majority - but not necessarily all - vendors have a viable cloud offering," says Klappich, who points out that the phenomenon occurs every time there is a change in technical architecture.

"When we went from mainframe to mini-computer the mainframe vendors had more mature and often functionally-deeper products," Klappich explains. "So while they had that advantage, the mini-computer-based vendors offered a new value proposition by allowing distributed computing and less expensive operating models but less functionality initially."

That changed over time as the mini-computer vendors added more functionality and as the value of ...