Dark Clouds Over Cloud Services Reflect Pull of Legacy Technology

Written by Bob O’Donnell, Special for USA TODAY

9:32 a.m. EST February 17, 2016

FOSTER CITY, Calif. — Call it the mountain of inertia. Or maybe, the obstructions of legacy.

Regardless, the reality of how technologies get adopted — particularly in business environments — is often in stark contrast with popular perception. Great new devices or services come out, they get written about obsessively in the press, discussed endlessly in social media, and, as a result, it’s easy to presume that their pace of adoption is rapid.

The reality, however, is often far different.

Examples are abundant. In the enterprise, for instance, everyone’s moving everything to the cloud, right? I mean, it’s just a matter of time, isn’t it?

Not so fast.

Yes, lots of companies are moving lots of workloads to the cloud, but it still only represents a fraction of the computing being done within the walls of most organizations’ own data centers and delivered to traditional computing devices (i.e., PCs). In fact, depending on who you ask, the cloud-based percentage is likely to be somewhere in the mid-teens, which is decent, but nowhere near a majority.

On top of that, several years into the cloud “revolution” we’re seeing public companies already start to reduce their growth expectations. Don’t get me wrong, they’re still strong, but not as stratospheric as many have been presuming.

Cloud-based companies ranging from Salesforce (CRM) to Workday (WDAY) to newly IPO’d Atlassian (TEAM) to Zenefits are all facing additional scrutiny from Wall Street and seeing their stock prices, in the case of the public ones, taking a major hit.

The problem? Unrealistic expectations based on past performance that the Street is now concerned will be difficult to meet.