Cloud Partners See Profitability Rise

Cloud Partners See Profitability Rise

Microsoft Cloud Partners see better cash flow and faster rates of growth than partners who don’t offer cloud services, according to Successful Cloud Patners 2.0, the recent study by IDC in partnership with Microsoft.  Partners who have been in the cloud longest (top 25 percent) had almost 15% revenue growth – over 5 points higher than those in the cloud the shortest amount of time (bottom 25 percent), the study said.

“Over a year ago we said listen, we are an NSI, we are 100% Microsoft dedicated, we are not taking advantage of the cloud opportunity here,” said Emily Lynch, VP Marketing with partner Catapult Systems, in the study.

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Get the IDC Study PDF

The survey numbers indicate a clear trend toward recurring revenue. Cloud oriented partners are able rake in recurring revenue at significantly higher rate than non-cloud peers. The top 50-percent of recurring revenue partners have higher gross profit and growth than the bottom half.

“By 2015 our target is to no longer focus on up front software licenses. Both cloud and traditional offerings will primarily be sold on a subscription basis,” said Hans Petter Dramstad, CTO for partner Visma.

IDC tracks the public cloud services market very closely.  Here are some compelling cloud growth statistics from the whitepaper:

  • Spending on public IT cloud services is expected to reach $108 billion in 2017 from $47.4 billion in 2013 for a five-year compound annual growth rate of 23.5%.
  • Public cloud spending is growing at five times the growth of the IT industry as a whole.
  • SaaS is expected to remain the largest public IT cloud service category through 2017 (57.9% in 2017).
  • Emerging markets will grow nearly twice as fast as developed markets, narrowing the gap on the size of the markets. By 2017, emerging markets will account for 21.3% of the public cloud opportunity.
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