The transition to Cloud can be hard for MSPs. Here's how to make it a little bit easier.
It’s not so much whether solution providers should have a Cloud presence on some level, that was determined long ago. The market is now about how your company has implemented its Cloud strategy, and how it can produce the best possible return on the investment.
Rather than seeing Cloud technology as a disruptor that wrecks business models it is better thought of as a ‘constructor’, a new infrastructure opportunity that savvy operators can take advantage of, as long as they remain clear and focused on their specialties, and don’t try to be everything to everyone.
In a world of managed services, pay-as-you-go and offsite Cloud, customers now have more options than ever before, but the commercial imperative remains: increase versatility and scalability, while keeping costs to a minimum, and producing a high quality solution. Most importantly for MSPs, is to build and maintain high margins.
Visiongain, an independent London based business information provider, reported that the managed services market was around $55 billion in 2010 and is projected to reach $86 billion by 2016.
Most MSPs already have a background in on-premise infrastructure, giving them a unique opportunity to make the move gradually, via hybrid models, and managing the customers whole process end to end – a huge opportunity.
This does mean that channel partners may take a revenue hit while they adjust up-front capex sales models to fit the new ‘as-a-Service’ Cloud marketplace, but the advantages are many. With a promise to reduce costly administration, infrastructure expenditure and maintenance, and the ability for greater capacity and reliability, Cloud allows your customer to focus their total attention on their core business objectives, building their own competitive advantage in their specific marketplace. Help them do that, and you’ll earn trusted advisor status, and lock-in loyalty.
IDC is already projecting that the business process outsourcing market will continue growign at a compound annual growth grate of 5.3 per cent, to around $202.6 billion in 2016.
From a channel business’ operations perspective, the advantages are many – although not always readily apparent. Some partners making the transition to managed services see immediate benefits from recurring revenue models, while others struggle to match their old businesses profit levels, and fall back into their old ‘break-fix’ mentality for stability, ironically the more risky approach long term.
Cloud leads to a fundamental change to the business structure, from top to bottom. Whereas ‘hands on’ time is considered a key feature of break-fix revenue, its actually detrimental in the managed services space.
Remote monitoring and management and professional services automation tools mean you can reduce logistics costs, enhance scalability and provide remote access, such as through updates, routine maintenance.
Not only do businesses recognise the opportunity in the cloud but they want trusted partners like MSPs to help them to exploit the potential.
New research by MAXfocus shows that in the first instance, MSPs should look to expand their cloud services reach within their existing customer base - 87 per cent of those surveyed found that customers are already asking them about these services. Building services that not only meet client needs but leverage their existing capabilities should be the key focus.
Becoming that trusted advisor is key, and you don’t need to look far from home to find the foundations of your new business model.
A 2012 Trends in Managed Services study conducted by CompTIA reached the conclusion that the hallmark of any successful managed services practice was the foundation of automation and process efficiency. Without streamlined processes in place that are repeatable across all new and existing customers, the managed services model doesn’t hold up well cost-wise.
New Solutions and Opportunities.
A great way of approaching this problem is to aim to become a strategic partner with customers by taking on the role of the “outsourced CIO“ inhouse. Managing that customer experience firsthand, not just the technology, helps deliver more productive end to end Cloud-based solutions. It also helps channel partners push opportunities through their own ecosystem. Value adds such as big data or business analytics capabilities, app/software development, Cloud aggregation and all the training these solutions entail are all high margin opportunities.
Sustainability and profitability is key when when providing managed services. Oftentimes managed service providers have chosen the wrong equipment to achieve these goals. Unless your systems are streamlined, efficient and well monitored, hidden costs can keep popping up hurting your margins.
Even the basics, such as unreliable or slow remote connectivity issues not only increases your labour costs, as you have to fall back on ‘old world’ onsite truck visits, which hurts staff productivity and adds logistics costs, such as petrol. The intangibles such as damage to your brand due to poor quality of service, is key.
There are so many options for customers in the modern IT environment, and Cloud makes it so easy to change provider, that customers can now be lost as quickly as they are won. Providing that top shelf, seamless experience to your service is paramount.
Another key is providing a relatively homogenised, yet uniquely customisable offering in the Cloud world, a unified and efficient back end can reduce the risks behind conflicting systems, doubling up and database management.
The risk is, as each new IT service from a new vendor is added, that your offering becomes bogged with too many panes of glass to manage – let alone worrying about providing efficient and effective end solutions for your clients.
Other ‘virtual’ logistics, such as patch management and bandwidth monitoring, become problems too. If you don’t have a slick alerting functionality built into your systems, you waste MSP staff time monitoring and implementing patches, customer time, and you actually reduce performance and functionality – as well as opening your clients’ systems open to malicious attacks.
Excessive bandwidth activity can cripple a business, so monitoring it ahead of time ensures that spikes and irregularities don’t disrupt day-to-day operations.
A 2013 PriceWaterhouseCoopers survey showed that when CIOs and CTOs were asked about the status of cybersecurity within their business. 20 per cent said, “I don’t know.” As the report put it succinctly:
“Organisational leaders do not know or appreciate what they are up against, and they lack a clear understanding of the nature of today’s cyber threats, and those who pose these risks.”
At the human level, it is also a great opportunity for an organisation to leverage its training capabilities. At the C-level, you can act as an advisor on localised datacentre offerings, local privacy laws, the line-of-business cost risks from lax security, such as insider misuse, cyber-espionage and vandalism, and then push products such as proper web filtering mechanisms to great effect.
All are vital to ensure a business’ intangibles, such as brand quality, remain premium. No one wants a major privacy breach. This also leads into other opportunities for low level staff tradining, such educating employees about the risks of malware and compromised sites, as well as handling phishing emails and enforcing proper password protection. All the best security apparatus in the world is useless without proper training.
To conclude, the key takeaway is to ensure that your business has a clear plan of what it specialises in, what its unique offering is to the market, and focusing tightly on what your business does better than anyone else. Cloud doesn’t fundamentally disrupt a partners existence, but if you’re not careful to stay with the times, it can put you behind your competition. More importantly, a sharp, clear focus can ensure that an MSPs business produces high profit, high satisfaction results – and that is the easiest way to ensure customer loyalty into the future.