As a commercial finance expert that focuses on the technology space, I am often asked: “Are you losing all of your business to the cloud?” 

My answer to the question?


Three key high-level things to know about the Public Cloud industry as it pertains to financing:

  1. Software and Services can be financed up to 100%, including pre-paid cloud services!
  2. Businesses are not limited to paying monthly for public cloud services.
  3. There are many different ways to pre-pay for 1+ years of cloud services in advance, for the purpose of locking in good rates, getting volume discounts or shifting budgets.

1) In the last two years, we have seen an increase in requests to finance pre-paid cloud services among many other “soft costs” such as maintenance contracts, licensing renewals, etc. We have started to finance things like AWS Reserved Instances, Pre-paid Microsoft Azure and even data migration services related to moving to the cloud. It is true that the finance and leasing industry typically has been restricted to physical equipment only and most traditional lending sources still do not prefer to finance these types of projects. However, there are many reasons why niche firms that specialize in technology specifically are starting to get these projects approved.

2) The major Public Cloud players do not limit businesses to monthly payments only, in-fact, they reward them for pre-paying for cloud services. 

For example:

“AWS Reserved Instances (RIs) enable companies to reserve compute resources ahead of time, which delivers huge savings on hourly rates, especially with regards to predictable workflows. RIs are heavily discounted (for example, AWS knocks up to 75% off its standard hourly costs, which obviously offsets any applicable finance charges).”

3) Paying monthly is still often the most popular option for most small to midsize business, especially companies that are pretty light users of public cloud. However, there are several categories of business that are heavy to moderate users of cloud data such as software developers for example. We are starting to see more and more heavy users of cloud shift to pre-paying 1+ years of services to take advantage of different incentives.

As mentioned in Shamrock Consulting’s Blog on Public Cloud they stated that:

“As public cloud providers continue to outpace their private rivals, the competition within the public cloud space will only intensify. And as it does, expect to see Reserved Instances come down in price, leading more and more large companies to take advantage of the obvious savings.”

In short: given the fact that (1) pre-paid cloud services can be financed 100% over multiple years, (2) businesses are not limited to monthly payment options, and (3) the advantages to pre-paid cloud services is only growing, I do not see any reason why the need to finance will slow down in the near future. As these services become more and more attractive, technology finance companies like Blue Street Capital will continue to develop more financing options for these services, such as quarterly payments, deferred payments, and step payments – thus giving CFOs and management more options to buy the public cloud services they need.


**Shamrock Consulting is a trusted cloud service provider that has been an eco-partner of Blue Street Capital for over 5 years. For more info on the statements referenced by them in this blog you can visit Ben Furgeson’s blog post on “Public Cloud vs Private Cloud”:

Future content related to this blog:

*Case Study- Global Software Developer – Annual Microsoft Azure Renewals 2017 & 2018