You don't have to look very far to see plentiful evidence that a commitment to 'cloud' means a commitment to ramp spend on sales and marketing (e.g. see Are you a Facebook Bull or Bear?). Or take a look at the P&L for SaaS poster-children Salesforce.com and Netsuite and many others besides, which glory in S&M spend that generally exceeds half of top-line revenues.
Which is why today's trading update from AIM-listed asset management portfolio analysis provider, StatPro, struck fear in my heart, when I read that they have "increased (its) spending commitments … to invest in more sales people and marketing activities to promote (its) cloud solutions". You may recall that StatPro is on a journey to move entirely 'to the cloud'.
I'm not going to repeat my commentary a couple of months ago about the wisdom of this move (see Statpro Revolution costs going north) – but if you are a software player you really do need to read this – again and again.
But let me highlight just one point. To date, StatPro has 178 clients using the first version of its cloud product (V2 'beta' out soon). It needs some 2,500 'cloud' clients even to match revenues for its 'legacy' on-premise product.