Making money in the cloud comes in many ways

ORLANDO – The cloud is the present and future – no ifs, ands or buts. But just like every other time new technology comes out, many in the channel are worried they’re going to become irrelevant in what remains a fairly new market.

Questions arise such as: How do you sell the cloud? How do you make up for the margins lost from traditional on-premises solutions? How do you make significant dollars with the cloud?

The channel community can relax somewhat as the there are answers to all of these questions.

Managed services supplemented with cloud services

Selling cloud solutions really isn’t any different of a concept than selling on-premises solutions. Sure, the cloud is completely different, but the concept stays the same.

Take Microsoft’s Office 365 for example. The cost per seat monthly is uniform across the board. One managed service provider (MSP) isn’t going to create a larger margin from selling Office 365 than another. So how do you make a profit then after the initial cloud migration and setup?

Craig Fulton, ConnectWise

“You’re selling Office 365, and you need to wrap services around it that compliment it, just like you did when it was on-premise,” said Craig Fulton, product manager at ConnectWise.

“You sold a server and wrapped things like anti-virus, firewalls, or a backup system around it in order to complement it. You’ve got to do this in the cloud too. You’re not just selling Office 365 and then supporting it. There is more money to be made.”

The point being that MSPs have to prove to their clients they are needed. It could even be that the same add-on you were including on top of an on-premises solution would work just as well in the cloud.

Opportunities include backup services, mobility services, networking services, and security services. These are extra services that organizations all across the world need, and are willing to pay for an MSP’s expertise in the subject.

Skykick, a cloud management provider for MSPs, based in Seattle, has done just that. The company’s vision has always been around building a cloud management platform that helps with migration to the cloud, as well as having a strong backup solution on top of that. They bundle both of those solutions on top of Office 365.

Chris Rayner, Skykick

“With Microsoft cloud solutions, whether that be Office 365 or Azure, we are essentially a reseller,” said Chris Rayner, Skykick vice president of product management. “The burden of support and billing is on you, but because of that you have a higher margin. By allowing you to bill, you can bundle things into the Microsoft product. So you can take it from selling Office 365 to a bundle that has your products and services on top of that, allowing you to keep those high margins.”

Selling the cloud is a different conversation

Expertise is always going to be needed. Just because the cloud is “easier” to manage for businesses, doesn’t mean the components making up the technology don’t require the hands of expert IT professionals.

“Certainly, I think that there are a lot of components that are even more complex, therefore driving a higher skill set,” said Sandy Reeser, president of VC3, an MSP based out of South Carolina. “Not today, and not anytime in the future, can I see a cloud service like we provide being sold at Wal-Mart. There will always be a need for high level technical expertise.”

Sandy Reeser, VC3

That starts with a higher understanding of the client’s needs than just offering a solution. Trust is an important factor moving forward into the cloud due to the fact that companies using the cloud don’t physically see where their information is going, compared to seeing the servers sitting in a room in the office.

“It is even more relevant with the cloud than on-premises because it is a larger hurdle to get customers to trust you than it was with on-premises. Now all of a sudden they don’t have possession of those things anymore, so they really have to believe you’re the right partner and they really have to trust you,” said Reeser.

Hop back over to Seattle and there is Arterian, a cloud solution provider (CSP) created by Jamison West. Six years ago, West fully bought into the future of the cloud and sold off the MSP aspects of his business to Aldridge, an MSP based in Texas. As a CSP, he has been able to expand nationally, and into Canada.

“It’s not about maintaining their infrastructure anymore,” said West. “I can make money providing services, layering on security, educating their staff, and connecting to other products within their business.”

West doesn’t believe that actually pitching a client on the cloud is a problem at all, as it “sells itself.” He gives an example of a six user company that is looking for cloud services, and how he can provide the same exact service as the enterprise across the street for a fraction of the price that they would have been paying on-premises.

Jamison West, Arterian

“There is this misconception from clients that once you install the services, why would they still need you?” said West. That’s where offering new services, and becoming more flexible comes in. “We can’t make money doing what we were doing five years ago, and five years from now, it may be even more different than it is now.

“It’s important for people not to walk into a customer engagement with the pre-conceived notion that the answer is always going to be the same,” added Reeser.

Becoming a strategic advisor

Part of the changing landscape is the role that MSPs play once any service is installed. Instead of popping in every few years to update the servers, an MSP is now a constant presence inside any client they partner with.

“We’re here as a strategic partner, not just a break-fix when it comes to equipment,” said Bryan Gregory, president of Aldridge, the aforementioned MSP who acquired Arterian’s MSP assets. “Really talking about how to make your users more efficient, and what pieces and technology we can bring to the table. That’s what really keeps us relevant.”

Every client has different needs. The majority of the time, what works for one client won’t necessarily work for another. In short, MSP’s are essentially providing a consultant role on top of its technical services.

“A lot of people fear that our need is dwindling, but it’s really not because of how complex the cloud is. Making sure that the client understands that just because they’re in the cloud, that doesn’t mean that our need goes away. It starts with being that consultant and expert,” Gregory said.

Consultant may not even be the right word, according to Brad LaCroix, manager of support and managed services for CDN Top 100 Solutions Provider, Broadview Networks based out of Winnipeg.

“The word partnership is a better term than consultant, because we working with you more than we ever have before, and becoming part of what your business plan is,” said LaCroix.

In fact, to LaCroix, the cloud is more about business than it is about technology. By taking a step back and looking at not just what the cloud does for technology, but how it affects businesses, it changed his perspective.

“We really chip at our business in order to become more and more of a strategic advisor, and understand more of the business side of what our clients are doing, not just the technology side. You can talk about how the cloud can help with that business, and walk them through what they need to do to make the cloud successful for them. That’s where you make up your margins.”

Fulton gave this example, comparing the new cloud market almost to when it became possible to switch telephone providers but still maintain your phone number. Once you could keep your phone number, it became very easy to abandon your current provider and move to its competitor. The same with the cloud.

Trust and great customer service will prevent that.

“Work hard to keep those customers, and protect your customer base. Provide world class customer support and they won’t leave. Give them services around Office 365 that they can’t get anywhere else, and they won’t leave,” said Fulton.

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Jim Love, Chief Content Officer, IT World Canada

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Alex Radu
Alex Radu
is a staff writer for Computer Dealer News. When not writing about the tech industry, you can find him reading, watching TV/movies, or watching the Lakers rebuild with one eye open.

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