XChange 2012: Cloud Computing Services Growth Is Off The Charts

Customers are embracing recurring revenue cloud computing services at a breakneck pace.

That was the word from hundreds of partners and vendor executives attending the three-day XChange 2012 conference billed as ’Channel Without Limits’ at the Gaylord Texan this week in Dallas, Texas.

[Related: CRN's Exclusive Coverage Of XChange 2012 ]

’Cloud services’ demand is exploding,’ said Andrew Pryfogle, senior vice president and general manager of cloud services for Intelisys, a master agency distributor of cloud and telecom services working with solution providers. ’Customers are sick of writing checks and continuing to invest in on-premise boxes and professional services under the old IT [information technology] model.’

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Intelisys’ solution providers are seeing as many as five deals a day driven by customers frustrated with the high cost and complexity of antiquated on-premise IT solutions, said Pryfogle.

One example, said Pryfogle, is SolutionSet, a digital consultancy in San Francisco with 1,500 users at 17 locations, that moved from an on-premise call manager product to a cloud-hosted VoIP solution from iCore at a big cost savings for the customer and a robust recurring revenue stream for Intelisys partner FusionStorm, a national solution provider headquartered in San Francisco, Calif.

’The economics of the old solution didn’t make sense anymore,’ said Pryfogle. ’They were growing too fast, and it was too difficult to maintain the on-premise solution. They wanted to do it in the cloud.’

Axciss Solutions, a Groveland, Fla., solution provider, has in the last year driven its recurring revenue cloud computing services business from 20 percent of sales to 85 percent of sales with about 1,500 customer seats now operating completely in the cloud, said Axciss CEO Michael Coburn.

NEXT: A Bright Future For Cloud Computing Services

Even with that astronomical recurring revenue growth, Axciss' Coburn said he sees the recurring revenue cloud computing services opportunity as just in its ’infancy.’ He sees his company’s recurring revenue cloud computing services opportunity growing exponentially.

’This is just starting to take off,’ said Coburn. ’You are going to see 70 percent of all corporate data in the cloud in the next five years. Solution providers that don’t get on board are going to go away.’

ProVisionIT, an Orlando, Fla., solution provider, is moving all of its managed services customers to a cloud computing services model, said ProVisionIT CEO Josh Phillips. He said the company’s goal is to move from just 20 percent of its business coming from cloud computing services to 100 percent within three years.

’One hundred percent of our focus right now is bringing on board new cloud computing customers,’ he said. ’When a customer is at a point where they need to purchase new hardware that is when we move them to the cloud. We are moving those potential capital expenditure equipment sales to a cloud-based recurring revenue operating expense model.’

Vigilant Technologies, a Chandler, Ariz., solution provider, is aiming to move from 50 percent of its business coming from cloud-based services to as much as 80 percent next year, said Vigilant Technologies Chief Technology Officer Carl Ingram. He sees a huge cloud computing services opportunity coming from Microsoft’s Windows 8 and the Microsoft Surface Tablet. ’That could double our revenue from $2 million to $4 or $5 million over the next two years,’ he said.

Alcala Consulting, a Los Angeles, Calif., cloud computing services provider, has had a number of its small business customers shutting down their local office and moving to a virtual cloud computing-based model with employees working at home.

’The cloud is a concept customers are grasping,’ said Alcala CEO Marco Alcala. ’They want to know how quickly they can move to the cloud.’