WPC: Microsoft-Backed Study Touts Partner Benefits of Cloud

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Cloud computing is growing five times faster than the IT industry, and partners that incorporate cloud into their business models have more success than those that don't, according to a new Microsoft-sponsored report by IDC.

The findings of IDC's study (.PDF) were released on Monday during the kickoff of Microsoft's Worldwide Partner Conference, taking place in Houston this week.

"Partners who have worked with me, you guys know core to my job is focusing on your profitability. And also since I started the job three years ago, it's been cloud, cloud, cloud, right? So [I'm] really excited to be able to announce today the release of an IDC cloud partner profitability study," said Jon Roskill, corporate vice president of Microsoft's Worldwide Partner Group, toward the end of Monday's WPC keynote.

Earlier in the keynote, Microsoft Server & Tools Business President Satya Nadella said that partners that have adapted their businesses for the cloud essentially doubled their revenues. Roskill repeated the statistic, and added, "So you want to be thinking about the cloud, obviously. This study helps quantify all of that."

IDC gathered information for the study from extensive interviews with Microsoft partners, as well as data compiled from other partner surveys. It found that the most successful partners combined both cloud- and on-premises-based solutions and were early adopters of cloud technologies. While cloud-oriented partners -- those that derive over 50 percent of their revenue from cloud-related solutions -- did report initial problems with cash flow and longer sales cycles, among other things, IDC found them to "significantly outperform their peers" in multiple areas, including profitability, revenue per employee and customer acquisition.

[Click on image for larger view.] Source: IDC

Despite rapidly growing spending on public cloud services worldwide, IDC emphasized the importance for partners to provide hybrid cloud and on-premises solutions. By 2020, IDC projects the vast majority (80 percent) of the world's largest companies will still have more than half of their IT assets on-premises. The study also found that 74 percent of customers expect their cloud provider to be able to move services back to on-premises when necessary.

Among the study's other findings:

  • Spending on public cloud services will amount to $98 billion by 2016.

  • Most customers prefer a single cloud provider. Roughly 63 percent expect to have just one cloud service provider, while 67 percent said they would purchase multiple cloud services from just one vendor.

  • Emerging markets will show the most growth in cloud spending through 2016. The United States will be the biggest public cloud consumer, however, with 44 percent share projected for 2016.

  • Nearly half (45 percent) of infrastructure-focused partners currently provide managed services, while 45 percent of those who don't plan to offer them within the next 12 months.

  • The partners who participated in IDC's survey said it took them roughly three years to begin fully offering cloud services. However, they believe that today's ramp-up time is significantly shorter -- about six to 12 months -- given how entrenched the market is.

The release of the IDC study on Monday coincided with several cloud-related Microsoft announcements at WPC, including the upcoming Power BI for Office 365, the Cloud OS Accelerate incentive program, a Windows Intune discount offer, new Windows Azure AD capabilities, and a premium offer for Windows Azure SQL Database.

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About the Author

Gladys Rama (@GladysRama3) is the editorial director of Converge360.