This is what happens when you move to the cloud! You move from a OTC revenue recognition to a monthly revenue recognition. THIS completely changes how you go to market. IBM is stumbling it’s way thru this, and Oracle is now starting to stumble thru it. SAP has also done this.
Remember their very large layoffs last month even thought they are highly profitable. The cloud model needs far less of everything verses the face to face OTC sales model. It’s far more efficient. The MAJOR problem with cloud is the transition to it. Revenues WILL drop and drop a lot, as its monthly revenue recognition vs the current model
Cloud revenue = sell once, bill monthly, modernize on the cloud providers schedule, host in very few data centers, staff in very few data centers. (Very efficient vs BAU)
OTC revenue = sell every 36 months, Bill the full amount every 36 months, modernize on the end users schedule, host in the end users data centers, end users do the staffing (labor intensive and not nearly as flexible)
Overall you are seeing the down side of cloud and it’s revenue recognition. Revenues will drop as you move to cloud