Many Service Providers are making the transition to Cloud Computing. According to the CompTIA Fourth Annual Trends in Cloud Computing Research – Cloud Service Providers see 50% growth or greater in sales for Cloud Computing, as compared to established products/ services growth. Higher margins are also anticipated for Cloud Service Providers at 49% of the time. For mature MSPs the leap may not be that far, as they already have a business model that is adapted to the monthly recurring revenue model. For others, the leap doesn’t have to be that far, if they address fundamental issues in their service plan before they launch their new Cloud service. The first most important step is for the service provider to adopt a model that meets their core strengths.
Some service providers have strong technical integration skills and may find opportunity for project work integrating premise solutions to public and/or private cloud solutions.
Cloud Service Providers
Other service providers may have strong data center skills and may find projects building private cloud infrastructure and/or selling their own data center infrastructure as a cloud solution.
Cloud Aggregators /Reseller
Other service providers may find it easier to white label cloud solutions and/or resell software as a service and other cloud based solutions. Those adopting the reseller model face specific challenges in that they may be accustom to selling contracts with upfront payment versus subscription services. Accordingly, they should consider tuning their business model to achieve significant revenue growth and improved margins.
How to Optimize Your Marketing Mix to Reach New Cloud Buyers
Your existing customer base who bought on premise solutions may not be your ideal candidate for Cloud Computing Customers. To reach a broader range of customers, you may need to move to a variety of online tactics that include updating your website, email marketing plans and social media programs. By extending your reach to broader online markets, you may attract cloud buyers searching for instant solutions to their IT problems.
How to Transition Your Sales Team to be Cloud Ready
Your existing sales approach may be good for selling larger contracts with complex integration requirements for software, hardware and related services. Some cloud buyers may be looking for turnkey solutions that are easy to implement with little or no integration or customization. It is important to asses if you are calibrated to short sales cycles resulting in more customers with payment spread over time, as compared to, larger contracts with longer sales cycles and up front payments.
How to Gain Operational Perspective on the Impact of Cloud – and How it Will Improve Your Margins
As a reseller, you may be selling subscription services resulting in your contract values coming in over many months or years. This may put less strain on cashflows because you may not need as much inventory or up front working capital to cover accounts receivable. However, you may earn the same amount of margin coming in over a longer period of time. This means you need more customers/contracts to earn the same amount of margin each month.
How to Package and Bundle Cloud Services to Maximize Revenue and Profits
Many customers turn to the cloud for reduced complexity and rapid deployment. It is important that service providers can quickly on board, train and support cloud computing customers. Consider prepackaged training assets to streamline implementation of your customers, along with improving your service margins. Also consider bundling applications into solutions (e.g. hosted email eDiscovery services) to improve overall margins.
By tuning your business model to the Cloud, you not only improve your margins, you also have the opportunity to differentiate your services. Consider consulting an industry expert for transitioning your business to the Cloud.