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Chasing Clouds: Achieving Sizeable Growth Will Require Business and Customer Alignment

by Andrew Brown | Jun 04, 2013

Considering the frequency that clouds are mentioned by business customers, providers, analysts and press, you would think that cloud computing is a huge new opportunity that has already taken over the lion’s share of information and communications technology (ICT) industry provider revenues and customer spending. The reality for most IT software, hardware and service providers, other than cloud natives such as Amazon, Google and Salesforce, is that cloud products and services still contribute a tiny portion of revenue.

In "Chasing Clouds: Largest Opportunities Can be Found Inside Existing Businesses and Customers" we estimate that cloud-related revenue of all types (hardware, software, and services) represented only 1-4% of total revenue in 2012 for a group of global ICT providers including CSC, Dimension Data, HP, IBM, Microsoft, Orange, and SAP. By 2015, we expect these percentages will rise to 5-9%. By comparison, we estimate that Symantec's cloud revenue, which jumped into the security software as a service market more than 5 years ago, represented more than 8% of total revenue in 2012 and will rise to nearly 12% by 2015 (see Figure).

Our analysis reveals several important lessons about business cloud opportunities for ICT providers that are not cloud natives. First, it will take 5-10 years before cloud related revenue becomes a truly significant contributor to total revenue. Second, over the next 3-5 years cloud related revenue will contribute an important and growing percentage to software and services business divisions. Third, short term rapid cloud revenue growth will be possible primarily through acquisitions of cloud natives. Fourth, mid to long term cloud revenue growth opportunities will be available primarily through helping existing business customers transition to private and public clouds.

 

 

Please click on the following for a replay of a complimentary webinar, Cloud Bubble Trouble for ICT Providers, on June 27 that discussed these issues:

Cloud Bubble Trouble webinar

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