IDC and Microsoft released a report with the catchy title “The Booming Cloud Opportunity” which appears to be the first in a series. Book two will probably take place a few years after book one and feature some of the original characters.
It is based on detailed interviews with 25 partners with solid credentials, like Christopher Hertz of New Signature, Mark Seeley of Intellinet and Geeman Yip of BitTitan.
Basically it says that Microsoft’s cloud Partners have double the growth of those who are less-cloudy. IDC defines cloud partners as companies that get at least half of their revenues from the cloud. Of the 750 Microsoft partners they surveyed, about a fifth of them hit that mark. That top tier of cloud partners reported overall company revenue growth of 24 percent on average, while the rest saw growth of 12 percent.
Next it says that Cloud Partners have 1.5 the gross profit of the less-cloudy . The figure for the cloud partner group is 41 percent gross profit, while the rest had 27 percent.
Apparently Cloud Partners have 1.8x the recurring revenue of the others. The cloud partners reported that 52 percent of their overall revenues, not just cloud revenues, came from recurring revenue sources. That compares to about 29 percent of revenues coming from recurring sources for the rest of the partners in the survey.
Other findings are that Cloud Partners sell $5.87 of their own offerings for every dollar of Microsoft Cloud Solutions. The rest of the surveyed partners sold $3.71 of their own offerings for every $1 of Microsoft cloud solutions. Importantly on this one, only a little over 400 partners answered.
The IDC report does warn that the surveys don’t always reveal causation.”There’s a lot going on inside all of these partner businesses that could account for the differences other than how much Microsoft cloud services the companies sell.
The report goes against the popular channel opinion on cloud — that selling cloud services is a recipe for lower margins and lower profitability.