The Channel logo


By | Simon Sharwood 18th January 2016 05:57

Vendors reporting their cloud revenue with funny money

Investors want to know vendors are cloudy but fine, so bean-counters paint a pretty picture

There's no way to tell just how successful your suppliers are in the cloud, because nobody's counting cloud cash consistently.

So says analyst house Gartner in a paper titled “Vendor Cloud Revenue Claims — Should Enterprises Care?”

Gartner thinks you need to care, because vendors are finding all sorts of ways to cook up a big number for cloud revenues, the better to impress you and – more importantly – convince Wall Street they have a future.

One vendor Gartner calls out as offering a hard-to-understand view of the cloud is IBM, which it notes recently claimed “US$9.4 billion in cloud revenue over the trailing 12 months” but also claims an annual run rate of US$4.5 billion in "as a service." What's the difference? Big Blue isn't saying.

Microsoft defines its cloud cash as coming from business users of Office 365, Azure and Dynamics CRM and has said it's scoring $8.2 billion a year with those products. But of course office 365 can include sales of Office for the desktop or device and while such users are offered OneDrive storage and other cloudy bits, there's no guarantee they use them or that their primary motivation for buying Office 365 is the cloud. Yet into the cloudy bucket goes that revenue.

Gartner says Oracle has found a way to characterise some of its hardware leases as infrastructure-as-a-service, while Salesforce operates dedicated hardware for some clients but counts anyone using its software as a source of SaaS simoleans.

The bottom line? Don't trust vendors' cloudy financials, because they probably don't reflect how we they're doing – or how fast they're growing – in the cloud.

Gartner therefore suggests asking the following questions of vendors when contemplating their clouds.

  • What revenue is for enabling technologies, often used to build private cloud and cloudlike environments?
  • What revenue is for consulting and professional services, not cloud services?
  • Which services offered are better categorized as hosting or managed hosting rather than pure cloud?
  • What revenue is cloud-associated? That is, what revenue is not for cloud itself, but driven by the revenue performance of actual cloud services? This includes activations and authorizations, but not the actual applications.
  • Which noncloud services are included in cloud revenue?
  • Are traditional products being categorized as cloud? Are all subscriptions being counted as cloud
  • How many of the vendor's cloud customers are net new as opposed to have moved from
  • on-premises to cloud (which can have many nuances in accounting)?
  • How much of your cloud business is actually being deployed, versus cloud shelfware?


comment icon Read 6 comments on this article or post a comment alert Send corrections


Frank Jennings

What do you do? Use manual typwriters or live in a Scottish croft? Our man advises
A rusty petrol pump at an abandoned gas station. Pic by Silvia B. Jakiello via shutterstock

Trevor Pott

Among other things, Active Directory needs an overhaul
Baby looks taken aback/shocked/affronted. Photo by Shutterstock

Kat Hall

Plans for 2 million FTTP connections in next four years 'not enough'
Microsoft CEO Satya Nadella


League of gentlemen poster - Tubbs and Edward at the local shop. Copyright BBC
One reselling man tells his tale of woe