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Adapting to the Cloud First, Mobile First World

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cloud firstAt Microsoft’s 2014 World Partner Conference recently held in Washington, D.C., cloud computing and the importance of adapting to the cloud first, mobile first world were the topics of most sessions.

Microsoft Dynamics Partners that adopt a cloud first business model will see faster rates of growth and improved cash flow, according to a recent study from Microsoft and IDC titled, Successful Cloud Partners 2.0.

“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 of Microsoft Partner, Visma.

The study revealed that Partners with the longest history of cloud computing (the top 25 percent) saw about a 15 percent growth in revenue.  That’s about five points higher than Partners who have the least experience in the cloud (bottom 25 percent).

cloud first

IDC Research

Cloud oriented partners are also more able to benefit from recurring revenue at a significantly higher rate than their non-cloud peers, according to the IDC research.  This is extremely important in a world where cash is king as the partners in the top 50-percent for recurring revenue have higher gross profit and growth than the lower half.

“There may be some short term pain as you transition to a recurring revenue model,” said the report. “But if you have a clear vision for your long term cloud future, it can be a profitable one. Recurring revenue can bring you predictable cash flow, higher gross margins, and even a higher valuation of your business.”

What’s more, IT spending on new devices is expected to reach $725 billion worldwide in 2015, according to Gartner research.  Spending on enterprise software and IT services combined will reach into the trillions of dollars around the world, indicating the strong trend toward the cloud first, mobile first world.

“IT is entering its third phase of development, moving from a focus on technology and processes in the past to a focus in the future on new business models enabled by digitalization,” said Richard Gordon, managing vice president at Gartner.

Below you find more of the compelling cloud growth statistics from the IDC whitepaper:

  • Software as a Service is expected to remain the largest public IT cloud service category through 2017 (57.9% share in 2017).
  • Public cloud spending is seeing growth rates 5-times faster than the IT industry as a whole.
  • Public IT cloud services spending will reach $108 billion in 2017 at a five-year compound annual growth rate of 23.5% since 2013 when spending was about $47.4 billion.
  • Emerging markets will grow nearly twice as fast as developed markets, significantly narrowing the gap. By 2017, emerging markets will account for 21.3% of the public cloud opportunity.

by RoseASP Hosted Dynamics

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