Software firms race to develop cloud solutions

Software firms race to develop cloud solutions

European software firms are joining their rivals in the US in the race to provide more cloud computing products.

Demand from businesses for software that allows information to be held by the cloud host’s servers and lets users access information simultaneously and in real time is soaring, Reuters reported.

It quoted a report by Gartner, which said the global cloud computing market is set to grow by 18.5 per cent this year and will be valued at an estimated $131 billion. Software companies chasing a slice of this lucrative market mean that competition is now fierce.

German business software company SAP is planning to bring its cloud products to the market more quickly than it originally aimed to, which could affect its short-term earnings. However, the company believes that investing in its cloud-based products now will pay off over the longer term.

Co-chief executive Jim Hagemann-Snabe said: “We have a situation now where we see the move to the cloud, particularly in certain markets like North America, happening even faster, and this is a great opportunity for us to revisit whether we should accelerate the move to the cloud.

"This would have impact on the 2015 level [of earnings]. However in a [2017] time frame you would have more than that back, so I think it would be the right thing for the company if we had the opportunity.”

Other businesses in the sector ramping up their investment in cloud computing products include IBM, Oracle, Salesforce.com and Workday Inc. Competition for business means that there have been a number of takeovers in the sector, with larger companies looking for small acquisition targets which can provide them with the cloud computing technology to sell to customers. SAP spent $7.7 billion in 2012 to snap up two online computing firms to boost its capability to produce cloud computing technology.