In the current economy, companies are searching for ways to save money, limit their fixed costs (including infrastructure and capital expenditures) and improve efficiencies. In addition, trends such as the use of smartphones, tablets, multiple devices, and telecommuting have created a perfect storm ripe for an alternative IT solution such as cloud computing. Although cloud computing in its various forms has been around for a few years, it is gaining momentum as a tangible solution. Companies have started using the cloud computing paradigm internally to improve on IT service delivery and foster innovation. Some telecommunication providers (“operators”) are offering a range of services such as network data backup and in some cases are partnering with established cloud providers to either resell their services or provide infrastructure and hosting services.
By 2017 global cloud service providers (‘CSPs’) are expected to generate approximately $235 billion of revenue from cloud computing services.1 At the same time as companies are turning to the cloud, individuals are increasingly finding answers there as they jump from laptop to smart phone to tablet in their daily work and play. Data and services can be accessed from anywhere, from any device. As cloud services are gaining ground, “operators” business models need to be constantly evolving to meet the business needs of their clients. Operators can provide cloud services directly or they can work with other CSPs to offer various business solutions that incorporate different aspects of the cloud models. For operators, when accounting for revenue generated for cloud services, challenges may arise specifically in revenue recognition patterns and costs associated with these services. Often it is difficult to identify cloud computing contracts’ multiple elements, the potential for lease accounting or whether an operator is acting as principal or agent on behalf of another service provider.
