THAT’S IT, PACK YOUR BAGS, HONEY, WE’RE MOVING TO THE CLOUD!

Have you ever heard of Salesforce.com? Or this thing that everybody is calling the cloud? Is it software? Is it hardware? Does it produce rain? Should I be concerned about shelter?

The cloud is actually a little bit of all that. The essence of the cloud is man’s basic want and need to enhance functionality while lowering TCO on somebody else’s real estate. Gosh, we’re greedy, aren’t we!

But think about it for a second—a company decides it’s “going to the cloud” and that it’s done with all its servers, boxes, cables, ERP, data storage, switches, routers, blah, blah, blah—that is no small task. In reality, it is an outrageously complex undertaking. And like I’ve said in past blog posts, when there is ‘change’ and it is ‘complex’, services companies with a consulting bent will tend to flourish…..especially if they can manage a piece of that away from the client. So let’s focus on just ERP and data from my litany up above.

In the ERP space, Workday will be going public later this year as the rock star contender going up against SAP and Oracle. And in Big Data, Splunk just filed. When companies like this enter the public markets with great success, it is due to their growth trajectory. And when they grow, the ecosystem for their services partners grows too. We will be coming to market with a few companies over the next months along this theme. There are emerging markets in cloud-based ERP (Workday) and Big Data (Splunk) with tremendous underpinnings—and while the software companies are the centers of those universes, or rock stars, the services partners are growing at a similar rate with attractive value propositions. And if you ask me, given where software multiples are these days, the smart money (with strong returns) is in services……but maybe I’m biased.