Porter’s Five Forces Analysis of Cloud Computing

Grazed from Symantec. Author: Dennis Wenk.

Few markets have grown as quickly or have caused as must disruption as cloud computing. According to IDC, the cloud computing market will surged by 25% in 2014. The market will continue to expand rapidly as enterprise organizations realize the significant impact that embracing the cloud can bring in terms of productivity, agility, and competitiveness.

Security has often been cited as a reason NOT to adopt cloud services. In response to this concern Cloud Service Providers (CSPs) are investing more in security, as a result secuirty is now becoming baked into the cloud service. This fundamental shift caused by cloud computing continues to disrupt traditional security markets. This disruptive force is different than the usual competitive rivalry. In an effort to get a better understanding of ‘why’ cloud computing is such a market disruptor a quick a “Five Forces” analysis is in order…

Let’s start with a brief level-set on Porter’s Five Forces model to provide a foundation. Five Forces Analysis was developed by Michael E. Porter in his book, “Competitive Strategy: Techniques for Analyzing Industries and Competitors“, in1980. Since that time it has become an important tool for analyzing an organizations industry structure in strategic processes. The Five Forces Model looks at the competitive landscape from five different perspectives, and helps evaluate each competitor’s likelihood of success. The diagram below provides a snapshot of Porter’s Five Forces as well as a few characteristics of each force…

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