Cloud Computing: What MSPs Must Consider to Grow Their Business

Managed service providers (MSPs), like you, made some difficult decisions coming into 2015. And you still are as the first quarter is coming to a close and three more are ahead.

You’re debating many pressing questions. Some, if not most, revolve around cloud computing. Particularly nowadays because the cloud has become a technology embraced by mainstream businesses.

Years ago, the dilemma surrounding the cloud was a relatively easy one to address. Your clients were just asking questions like: “what is cloud computing?” and “how can it benefit my organization?”

That was then, this is now.

It’s a Cloud Revolution
According to a recent article from Gigaom, 2015 is not a game-changing year for the cloud. Why? Because despite all the talk about infrastructure-as-a-service consolidation and technologies, such as containerization and co-location, real change takes more time.

Instead, consider this during 2015: massive cloud provider consolidation is a viable choice. It makes some sense: 75% of the market is owned by less than 10 providers. So, the loss of smaller services is inevitable … right? Maybe, maybe not. But certainly not within the next 12 months.

On the other side of coin, Gartner is predicting that by 2016 organizations of all sizes will store more than a third of their content on the cloud. Most clients are serious about adopting the technology. And, they want you to make it happen.

That means you must make sure your clients get it. If not already, sometime during the rest of 2015. But, there’s no foolproof way to do it.

So, here’s a handful of methods and strategies to consider. That way you have a chance to successfully fulfil your clients’ demand for the cloud.

Leverage ‘Evolved’ Vendors & Distributors
In the world of IT, there are two kinds of vendors and distributors. And they sharply differ in their approach to the market and understanding of the channel.

“Old fashioned” vendors and distributors think that the secret sauce to you selling more is to give you a list of amazing features and benefits of every solution they offer. They give you these until you believe in their product and represent them to your clients. They only focus on themselves. They push their wares on MSPs and VARs, and simply get pushier until you deliver.

“Evolved” vendors and distributors get that while we must understand and believe in the products we sell, that knowledge is worthless until we learn how to sell and make a profit with them. They know that it’s in everyone’s best interest to teach us how to market, sell and profit from selling solutions.

MSPs and VARs should seek vendors and partners that push true partnerships … not products. Look for people that invest in you … and grow you as a business person and salesperson.

Resell Public Cloud Services
While this choice may not be the one with the maximum profit potential, it’s certainly the one that should be the default for many MSPs. The reason is simple: it offers the least cost of entry and virtually no downside risk.

Reselling public cloud is likely the lowest cost option for your clients and one that is certainly evolving, maturing and expanding to meet more use-cases each day. Big vendors like Microsoft, Amazon, Google, Rackspace, and more, are in a race to the bottom pricewise. And unless you can confidently beat them in quality or price, you would be smart to avoid picking that fight. Their economies of scale are simply incredible. Thus, their competitive position is formidable. Unless you have deep pockets or a compelling reason to do so, don’t build your own cloud. Likely, it will result in nothing more than raising your stress level and reducing your take home pay.

Unless your core business is building public clouds, you would be well-served developing a suite of products and related services to offer your clients in each category. Be sure to include Platform as a Service (PaaS), Infrastructure as a Service (IaaS) and Software as a Service (SaaS).

IaaS & PaaS
IaaS as an offering for clients makes a lot of sense. It’s not a high-margin offering, but it can lead to higher-margin services to design, procure, deploy, manage and govern on behalf of your clients.

MSPs would be well-served exploring solutions from Amazon Web Services, HP Cloud, DataPipe, Google Cloud Platform, Rackspace, and of course, Azure. The key is committing to a solution and learning more about it. How to use it to meet the needs of your clients. Don’t accept failure to adopt or procrastination to determine your portfolio. You have no choice but to figure it out. It’s certainly the future of our industry.

Some of us are less apt to make the evolutionary jump toward moving our client’s infrastructures to the clouds using IaaS and PaaS. Instead, we seek an easier alternative. Perhaps the reason is that we simply don’t have the desire, or horsepower, to leave behind the client/server architecture focus that we built our business on.

The good news is that there are Desktop as a Service (DaaS) solutions that are really just evolved PaaS products from companies such as IndependenceIT. Those take away some of the margin in exchange for a much easier-to-adopt “plug-and-play” solution for IaaS and PaaS.

SaaS is the biggest of all categories with thousands of firms vying to replace the old fashioned “boxed” software riding on our PCs and servers. That software is now being rewritten to be native to the cloud so it can compete with the cost efficiencies and version upgrade management advantages SaaS offers.
MSPs should look to build their portfolio leveraging industry-leading directories, such as GetApp, SaaSDirectory, ReadySaaSGo, Cloud Showplace, Pax8, and the granddaddy of them all, Salesforce’s AppExchange.

Offsite Backup
Backup offerings to the cloud is second only to Microsoft Office 365 in terms of the potential for fat MSP margins. Even the least-skilled among you deploy an effective cloud backup solution. You can do it either by reselling another cloud provider or by backing up to your own data center or co-location facility.

Backup is a lucrative business line. Yet, it depends on the maturity of the offering, the quality of the clients, and the scalability of the service. You might only use backup as a small component of your business. But, it does have the potential to be a big part of your service catalog. It’s best to offer a business continuity option, like Datto or Axcient, and a more traditional file and folder backup system, like Intronis and Carbonite.

Cloud Management
This can be a large and generic category for cloud computing. Given how prevalent cloud is today, it’s difficult to imagine that even small businesses might not have some cloud-based solution.

Whether it’s cloud-based accounting, CRM, POS, VoIP, or some other line of business application, there are plenty of cloud solutions directly used by clients. It’s crucial you remain responsible for managing these solutions and ensure you bill for that service.

Know that you can play a role in managing those cloud environments. While you cannot see another vendor application’s infrastructure, there are still valuable services you can provide based on a third party’s cloud environment.

Services such as solution design, due diligence, sourcing, policy development, security, management, integration, aggregation, customization and rebalancing all represent opportunities for MSPs to add value and bill for their most precious resource … time. It’s important you bill for your time and not buy into the myth that cloud represents the end of the MSP. It’s the greatest opportunity we’ve ever seen for us to make money, increase margins and improve our quality of life.

Private Cloud
It’s remiss not to mention private cloud as one of the biggest opportunities for you throughout the entire array of “cloud computing.” Private cloud is still a worthwhile offering for many clients. Especially those in the upper small to medium-sized or mid-market space. You can do everything from building and deploying to full management of a private cloud. And, you don’t ever have to own the infrastructure.

Offering the cloud to clients can be a risky endeavor. But, it’s a risk worth taking. Clients are much more interested in cloud computing than they were a few years ago, and you need to recognize this significant change.

Using your imagination and the opportunities before you to share and offer the cloud, you can make sure your clients move to the cloud is a smooth and productive one.

Learn More. Sell More.

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