Savvis Nearly Doubles Cloud Revenues

Savvis Nearly Doubles Cloud Revenues

savvis cloud revenuesSavvis Inc. has a message for anyone doubting the cloud computing market: Check out our cloud revenues. Although still a small portion of Savvis's business pie, cloud revenues at the company  nearly doubled in 2009 -- getting a boost from new customers and existing media industry clients. Here's a closer look at Savvis' cloud revenue trends.

Company officials speaking during the company’s Q4 earnings call said Savvis generated $7.4 million in cloud revenue last year, a 93 percent increase over 2008. Cloud revenue in Q4 was $2.5 million, a 25 percent boost quarter-over-quarter and a 105 percent increase year-over-year.

Granted, Savvis’ cloud business represents a tiny portion -- less than 1 percent -- of the company’s overall sales. Savvis reported total 2009 revenue of $874.4 million. But Savvis executives see the addressable cloud market growing rapidly, as companies looking to reduce IT costs and boost flexibility fuel demand. The company cited Gartner Inc. numbers that peg the addressable market $1.2 billion in 2009, expanding to $4.9 billion in 2012.

“We are seeing enterprises accelerate their adoption of cloud-based solutions,” said
Bill Fathers, Savvis senior vice president and global head of sales and marketing.

One-third of Savvis’ 2009 cloud business came from new customers, with the consumer brands, healthcare, software, human resources, and financial services segments represented. Among existing customers, the media industry showed the most interest in moving to the cloud, according to Fathers.

Media companies, in general, have become prime MSP customers. The spiky, unpredictable nature of media Web sites lends itself to the dynamic resource allocation of cloud computing.

Also worth noting:

  • Big revenue, small footprint.  Greg Freiberg, Savvis’ chief financial officer pointed out that managed services takes up less than 5 percent of the company’s utilized hosting square footage, but accounts for 44 percent of hosting revenue. That’s where things stood in Q4.
  • Change of fortune? Q4 bookings marked the company’s best results in that area in 18 months. Fathers attributed the uptick to customers needing to expend budget at year end, particularly those driving 2010 plans for growth or cost savings. But he also cited improvement in underlying demand.
  • Outsourcing on the rise. Overall, Savvis cited increased customer interest in outsourcing IT infrastructure services. For Savvis that means, an increased sales opportunity for cloud as well as traditional colocation.
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