How should one understand the success model for a cloud business? That is the question that a new article posted on the Microsoft Partner site, from one of its partners, CloudSpeed, aims to answer, and it sounds strikingly similar to Microsoft’s own strategy.
Specifically, Dana Willmer from CloudSpeed discuss the cost and maximizing investment for a cloud business. According to Willmer, cloud business often has a great fixed cost that must be paid up front, in order to build the necessary infrastructure for future growth. These include marketing and sales, and offering’s “productization” – in other words, creating a solutions that is integrated and specific to an industry.
A subscription model is commonly used for cloud business, to lower the upfront cost and purchasing barrier for customers. The return on investment (ROI) will come over time from these subscriptions to fund long-term results. To maximize this, Willmer suggests securing a large customer base, and ensure a healthy gross margin structure for the offerings; the subscription model will do the rest.
Willmer’s discussion of cloud business’s ROI and measure of success greatly coincide with Microsoft’s own business pattern, as the company often see losses – sometime for extensive periods of time – for many of its offerings before they turn into a profitable and important business, not just in cloud. If there’s anything Microsoft has historically been famous for, it’s sticking to their guns and develop a potential business, and we can be reasonably sure that the company will not change its ways anytime soon.