Cloud revenue model is hard for suppliers to manage

Technology companies struggle to accommodate the back-office changes required to provide cloud computing

Technology companies are struggling to accommodate the back-office changes required to provide cloud computing, according to James Bennet, director of the technology sector at business consulting firm Ernst and Young.

The move from licensed to hosted services has resulted in a different type of revenue cycle which has caused problems for many companies.

Revenue is no longer yearly or six-monthly and can vary according to the amount of cloud storage a customer has used. Many companies are therefore seeing a fall in revenue. The changes in revenue cycles also requires a different approach to billing and audit compliance.

Bennet argues that the way sales are done in the industry has had to change, with salespeople having to understand an entirely different product.

“Any new paradigm will require huge adjustment from an industry and see companies with the right approach win out while other previously strong companies fall away. For example, CRM specialist Siebel was unable to compete in the cloud with Salesforce.com. It didn’t have the right approach.”

Separately, Bennet hosted charity launch Byte Night last week. The event aims to raise awareness of the issues that result in youth homelessness. It is the biggest charity event in the industry and has raised more than £2.5m for young homeless people in the 10 years it has been running. Sponsors include major players such as IBM, Oracle and HP.

The main event, to take place on 8 October, will see about 4,000 people sleep outside in supervised areas around the country. BT will provide a live video streaming service between sites via an aggregator tool and the event has its own Facebook and LinkedIn site. To get involved, click here.