With IBM cloud revenue estimated to reach $7 billion by 2015 the revelation the SEC is investing how IBM reports creates questions that may impact all cloud providers. IBM reported that:
In May 2013, IBM learned that the SEC is conducting an investigation into how IBM reports cloud revenue,…IBM is cooperating with the SEC in this matter.
IBM’s reporting of cloud revenue is the result of a rigorous and disciplined process,…We are confident that the information we have provided has been consistently accurate.
Cloud services are typically paid for on a monthly, subscription basis. While customers often ink multiyear deals, vendors can’t recognize the revenue in the same way they would for a large up-front sale of hardware or perpetual software licenses.
The SEC investigation may change cloud computing revenue and reporting, but since cloud computing has been around since 1964 with the advent of Dartmouth time sharing, so it’s doubtful the IBM is violating any SEC rules.