Advancements in cloud technology have compelled businesses, especially those in the tech industry, to rethink the framework of their business models. This includes the way in which customers purchase products or services.
In an age where software-as-a-service (SaaS) is expanding – the SaaS market is expected to reach $34.6 billion by 2020– businesses in multiple arenas are capitalising on the advantages cloud technology can have on revenue streams. These industries have included technology, food, ride-sharing and even entertainment.
Through cloud technology, businesses are able to forsake the traditional ‘hard asset’ or license path, and adopt subscription models that charge customers on a monthly or annual basis.
Storage and entertainment services (such as film or music streaming) are now offered as a service with a recurring charge. Box, Dropbox, Netflix and Spotify are some of the big-name companies utilising the cloud for these purposes.
Cloud technology = big business
Tech giant Amazon has invested more into the cloud than Microsoft, Google and IGM combined, holding 34% of the global market share of the technology. Oracle, and Chinese e-commerce conglomerate Alibaba are also big names with a stake in the technology.
Oracle, for example, revealed a 7% revenue climb in their third quarter earnings report, mainly owing to its cloud services. Cloud revenue increased by 51%, reaching $1.5 billion, and its business in software-as-a-service accounted for $1.1 billion of that revenue.
Cloud growth is seen across the board, including at Microsoft, where subscriptions to the somewhat universal Microsoft Office suite have now surpassed traditional license / CD-ROM sales.
The age of the ‘hard asset’ is fading, and, with the assistance of the cloud, subscription models are set to dominate the market.
These models allow for a recurring revenue stream for businesses, and eliminate the need for constant marketing. With the help of the cloud, businesses can implement subscription models that keep customers on the service train for longer periods.