Your Clients Are Ready for Cloud. Are You?
As hype around cloud computing is starting to settle into reality, now is the time to start putting together your strategy for how your business will sell and implement cloud services for your clients.
The following is an excerpt from a Cloud Practice Guide that was commissioned by The ASCII Group and developed by ITEEx, a channel development company serving both vendors and VAR's business development needs. The complete guide 24-page guide is being released to attendees at regional SMB IT Success Summits being held around the country while being openly distributed to the industry later this year.
Why now? Industry data indicates cloud services have arrived, especially for the SMB market.
A 2010 Goldman Sachs study states that 58 percent of SMB always consider a SaaS solution, if available. 39 percent prefer a SaaS solution.
The total market for cloud-based IT at small and midsize businesses (SMBs) in the U.S. was worth $8.6 billion at the end of 2010, according to new data from Parallels.
According to the "Microsoft SMB Cloud Adoption Study 2011" research report, 82 percent of SMBs say buying cloud services from a provider with local presence is critical or important.
Marco Limena, vice president, Business Channels, Worldwide Communications Sector at Microsoft, said "As cloud computing becomes more ubiquitous and SMBs' existing IT becomes outdated, adoption will grow rapidly. The study also looked at adoption of software as a service (SaaS) and infrastructure as a service (IaaS) and found that SMBs that are adopting both SaaS and IaaS services are larger, more growth-oriented and more interested in additional services, such as unified communications and remote desktop support.
In 2011 Market Bridge polled 1,000 North American small and midsized businesses about their cloud computing plans and found that 70 to 85 percent fully expect to move major applications to the cloud in the next 12 months.
Additionally, 44 percent of companies claim to have at least one business application in the cloud already. And the midmarket push will give the cloud computing channel a boost, as MarketBridge found that 67 percent of respondents preferred to purchase software and applications through a third party, value-added, managed service provider or solution provider due to the need for both higher service levels and functional expertise.
This transition is more complicated than simply signing clients with vendor that offer SaaS solutions. Solution providers must do their homework and follow a best practices game plan. This transition will take time for both your business and clients so now is the time to start. There are several models to choose from -- SaaS, PaaS, IaaS, andthere will always be hybrid models due to issues such as sensitive data. So the probability that your future services and business will be based 100 percent on the new models discussed is very small if you are meeting your clients’ needs.
Another reason to add a cloud practice? Traditional reseller revenue sources will shrink.
Traditional revenue sources such as infrastructure management/support will be shrinking. There will be shrinking revenue from on premise client infrastructure support but even that can be mitigated if you decide to host (directly or through provider resources) client infrastructure. Remember, in this new model there are new opportunities for revenue in helping clients select SaaS applications, training them and customizing their applications. Some solution providers who have deep expertise in a certain vertical may elect to develop specific applications for their clients using application development platforms (PaaS) of Google, Microsoft, Amazon, etc. While the cloud model will lower margins on commodity services such as email, others such as infrastructure hosting and security will have increased margins. This model also improves your margins by lowering your delivery costs with fewer "truck rolls" and less phone support time. This will allow more time to explain and sell clients higher margin services such as work flow analysis, training and feature enhancements.
Now is the time to be creating your cloud strategy because if your clients haven’t asked already, they’re about to start.
Your clients will begin asking for cloud solutions. To maintain your value proposition, you should again lead the discussion positioned as the virtual CIO or trusted advisor. In fact one issue the solution provider community faces is that startup companies are tending to go 100 percent cloud on day one, bypassing the IT community and going direct to cloud providers initially. Solution providers must look at these market changes and plan for them - play defense now. By explaining the various benefits of cloud computing now to your clients, when they decide to start evaluating cloud services, they will come to you first. Even if clients don’t want cloud deployments currently, reinforce your position as a trusted advisor. Furthermore, a more proactive discussion will need to take place regarding areas and applications you believe can benefit your clients. Remember your suppliers will be trying to get their new cloud model offerings in front of your client, so make sure you introduce them and act as the primary lead in this discussion. This guide assumes you will begin to transition both your business model and your clients’ to the cloud where appropriate.
The ASCII Group helps solution providers by providing increased efficiency, knowledge and benefits from economies of scale. ASCII staff is responsible for supporting member businesses through industry specific services that aide in sales and marketing, vendor management and operations. That means more of your time is spent on building your business not administrating it. Learn more about why MSPs, VARs and Solution Providers are doing more with less with ASCII at www.ascii.com.