Microsoft, Oracle, IBM to alter pay to push cloud sales

Bloomberg

Microsoft Corp., Oracle Corp. and IBM—looking to stoke demand for cloud computing services—are said to be shifting incentives for their sales representatives, pushing them to ensure customers become active users over the long haul.
Microsoft in July revamped the way it pays its sales staff to tie incentives to how much customers actually use cloud-based software—rather than how many sign a contract for cloud services, according to sales chief Judson Althoff. Oracle has been rolling out new rewards for at least some employees that also are connected to customers’ use of its cloud services, according to people familiar with the matter.
International Business Machines Corp. in the past year has restructured its cloud sales team and tied compensation more closely to usage, according
to other people with knowledge of the
matter. Traditionally, companies would ink large software deals based on factors such as the number of a customer’s devices—and not actual subsequent use of the products. The cloud business is a crucial growth area for the traditional enterprise technology pioneers, battling against rivals Amazon.com Inc. and Alphabet Inc.’s Google.
The public cloud services global market is likely to increase more than 18 percent to $260.2 billion this year and almost double to $411 billion in 2020, according to Gartner Inc. Microsoft, for example, said it had generated $20.4 billion in commercial cloud revenue on an annualised basis. Tying usage to sales incentives should help keep customers on board when it’s time to agree to a new contract, said Stephen White, an analyst with Gartner.
“The behaviours of the salespeople need to be more in tune with what a customer actually is going to need and use,” White said. “It certainly makes the renewal discussion easier.” Oracle and IBM declined to comment.
Previously, Microsoft had been bundling cloud services, such as Azure for storing and running data and cloud applications, with many of its multiyear deals. Althoff said the shift in pay incentives is a significant change.“We did have ill-informed behaviours,” he said.