Page 21 - PowerPoint Presentation

IaaS Deal Economics

Recurring revenue opportunities can look very different from traditional resell opportunities. Before you
start making changes to your business, you must first understand the impacts individual opportunities
will have on your business model. Therefore, you should begin your transformation by comparing your
typical deals and how that might differ in a cloud environment. Below is an example of how an IaaS
transaction may compare with a similar on premise offering.

Illustrative IaaS Deal Economics …understanding the realities of the revenue and
margin impacts WILL help you understand the
On Premise IaaS Opportunity potential gaps in your business plan….
over 3 years over 3 years
…lower customer costs in the short term CAN help
Partner Revenue $44,500 $25,000 you close additional opportunities in a shorter time
frame…
Partner Margin $7,000 (15%) $4,650 (19%)
…to drive margin growth, changes in your overall
BIC Partner Margin $7,000 (15%) $5,970 (24%) business structure may be required…

Assumptions: Assumptions: …your business plan needs to be updated to
12% HW & 15% SW margins 15% on Cloud Services reflect the realities of your opportunities in the new
30% Gross margins on services 52% Gross margins on services model…
(BIC)
…professional services are often the key to
…some opportunities offer payback in 9-12 months… success when expanding beyond product resale…
– Cisco Cloud Provider

Source: MarketBridge Interviews