Eight Ways To Conquer The Cloud
There are massive cloud computing revenue opportunities for MSPs serving small and midsize businesses.
Welcome to the ubiquitous cloud. Sure, most readers know cloud computing is the practice of providing on-demand access to processing, software, and storage resources. But now your customers know about cloud computing, too.
Cloud computing achieved household word status in 2010, a year that saw the cloud dissected, discussed, and debated in a multitude of news articles, conferences, and research reports. This year promises more of the same for all things cloud. A multitude of vendors claim to offer it. The federal government says it wants to do more of it. Enterprises hope to shed infrastructure costs using it. There seems to be no way of escaping it. Still, cloud computing, for a business trend so well documented, generates a lot of uncertainty. That’s particularly so for MSPs. Some service providers fear cloud services will muscle into traditional business lines, such as managing customers’ on-premise gear.
But MSPs can find profit in the cloud. Even as some traditional on-premise business evaporates, there are massive cloud computing revenue opportunities for MSPs serving small and midsize businesses. In fact, 23 of the top 100 mSPs now offer cloud services from Intermedia. And the world’s top 100 MSPs – virtually all of which offer cloud services – saw their recurring profits grow roughly 30 percent from 2009 to 2010, according to MSPmentor. An MSP’s own transition to the cloud may require a rethink of service provisioning, administrative processes, and marketing approaches. But a service provider’s existing technical knowledge of networks and server platforms can provide a bridge to cloud services. Ready to take on the cloud? Read on for eight tips to get you started.
1. Build On What You Know
When looking into providing a cloud service, MSPs should take stock of what they do well and seek to parlay their experience and expertise into the new environment.
“What’s always good advice is take a look at your core business and what you have historically been good at and see what cloud-based services potentially slot in there,” said Matt Camassa, director of business development at LiveOffice LLC. “That is a way to dip your toe in.”
Info Exchange Ltd., a services provider in Kingston, Jamaica, followed the e-mail in the cloud track as well. The company capitalized on its background in e-mail and Internet services when it embarked on hosted Exchange services in 2007 (see sidebar). Info Exchange, which has a background in Web site and applications hosting, began offering e-mail protection services a decade ago, filtering customers’ e-mail in the cloud.
“We started to build expertise in how mail is routed across the Internet,” noted David Allen, Managing Director of Info Exchange. “We started leveraging our technical sales and our network infrastructure know-how, so when we went to market with hosted Exchange services, we could solve related communications issues that customers might face.”
Blue Ridge Internetworks, a service provider based in Charlottesville, Va., also tapped its experience to guide its Exchange-in-the-cloud business. The company hosted Exchange in house for a half-dozen years, prior to working with an outside hosting partner.
“It’s been good for our own business development to be able to say we ... understand the service inside and out,” said Jeff Cornejo, managing partner at Blue Ridge Internetworks, which partners with Intermedia for hosted Exchange.
Still, you don’t need to be an in-depth Exchange expert to start generating profits from cloud computing. Many of the best cloud channel partner programs help MSPs and solutions providers to bring endcustomers online quickly. And cross-selling opportunities are abundant – including areas like security and encryption, hosted PBX phone services and online storage.
2. Expand Your Services Portfolio
Once an MSP has mastered one cloud service it could be time to investigate additional offerings. Customers satisfied with your initial cloud foray provide a ready market for new services.
“What we have found is that once you become a trusted partner and service provider, sales cycles become shorter and customers are far more receptive to employing the new cloud-based paradigm within their business,” Allen said.
Info Exchange started thinking about adding more cloud services soon after it launched hosted Exchange. The company now offers online data backup and storage in the cloud as well as hosted SharePoint, e-mail archiving and Microsoft Office Communications Server. Allen describes his company as a service aggregator, as opposed to an MSP.
Camassa also advised MSPs to fill out their service offerings, building off of a keystone service such as e-mail.
“Look at some complementary or adjacent services that you could do in the cloud that still play into your core messaging and the core solutions you provide,” he said.
Camassa pointed to cloud-based security services or email archiving as possible services to bolster a messaging infrastructure service. LiveOffice’s e-mail archiving SaaS solution is available through Intermedia.
“If an MSP is doing e-mail hosting, a very natural fit is e-mail archiving,” he said.
More services provide more ways to attract customers. But it’s also a defensive move that reduces the risk of being outflanked by a competitor with a bigger portfolio. And, finally, a broader line-up of services makes for a stronger brand.
“Your brand, in my opinion, needs to have depth,” Allen said. “If you represent one or two things, that is only a small aspect of what your customer may be facing.
It also allows the MSP to diversify his portfolio which is important for the longevity of the business”
Allen said the depth-of-brand strategy dovetails with the service-aggregator approach.
“The cloud has so much to offer,” he said. “Don’t focus on just one thing.”
Turning Cloud Threats Into Opportunities
Cloud: Encroachment on traditional MSP business
Silver Lining: Introduce a new cloud-based service such as spam filtering, document management or online back-up to on-premise accounts. Or partner with a hosting provider to transition to cloud-based e-mail and or unified communications. Instead of spending a lot of time fixing customer gear, an MSP can focus on improving the overall messaging service, adding new features and deepening customer relationships.
Cloud: Transition to new business model
Silver Lining: Adopting the cloud doesn’t have to be difficult. For MSPs, it’s more of an evolutionary change in services rather than an abrupt shift. Much of what service providers already know about mail servers, networks, monitoring and management readily translates in the cloud. Moreover, many customers already leverage traditional IT outsourcing, so those same customers will likely embrace white label cloud services from MSPs.
Cloud: Customers’ migration worries
Silver Lining: Migration presents an opportunity to wrap your professional services around a cloud offering (hosting providers such as Intermedia offer migration services for MSPs who need a boost with this task). MSPs also surmount migration worries by upgrading customers to the latest version of a product, such as Exchange 2010.
Cloud: Potential disruption of selling activities
Silver Lining: Experienced MSPs will likely find themselves selling cloud to their accustomed audience – business executives as opposed to IT personnel. A VAR making the cloud transition, and used to selling the technical side of the house, may face a bigger shift. Look for cloud providers that provide marketing materials and sales training to get you started.
3. Think About Branding
MSPs with a cloud service need to develop a brand to sell it. Here are a couple of things to think about:
Most MSPs will partner for cloud services, rather than developing their own infrastructure. So, the fundamental branding issue for an MSP becomes whether to sell the service under its own name or that of its ally.
“You need to weigh the strength of your own brand and the strength of your customer relations before deciding how to brand the service to your end customers,” said Bob Leibholz, senior vice president of sales and business development at Intermedia. “In some cases, your company may have a strong brand in a regional area or vertical market so you’d lead with your own brand – the idea being to build your reputation and customer relationships, not your partner’s, but in other cases you may just be getting started with cloud services, so bringing a well-known, trusted third-party brand into the conversation with your customers can help to win more business. A good cloud partner for MSPs should provide both options.”
Guide To Branding In The Cloud: Key Steps
STEP 1: Make the call: yours or theirs?
That’s the basic question and one an MSP has to answer based on strength of its own brand relative to the cloud versus the clout of the partner’s brand. Many MSPs with a strong regional or vertical market presence prefer a cloud provider that lets the MSP sell under their own brand.
STEP 2: Think it through
Who’s your target market? What are your core businesses and key differentiators? What are your competitors doing from a branding perspective? What do you hope to achieve with your branding campaign?
STEP 3: Develop the campaign Logos
(if using your own brand), sales pitches, marketing collateral, trade show presence should all line up with your cloud goals. Many MSPs start with their own local business associations and by leveraging their current customers for introductions. Again, business people everywhere are wondering what the cloud is and what they should be doing with it. This is a chance to educate folks – go to the local chamber of commerce and teach folks the difference between Google and Microsoft. Find a class A building filled with real estate and law firms and do a seminar on productivity.
STEP 4: Get some help
Vendor partners may offer marketing collateral and other material to jump start your cloud branding efforts.
STEP 5: Consider tactics
Search engine optimization, Web site articles, e-mail marketing are all electronic tools of the trade. But can offline methods help craft your cloud image? Everything from newspaper ads to lunch-and-learns can play a role here.
STEP 6: Assess the results and retool if necessary:
Are Internet campaigns generating leads? Are ads raising awareness?
4. Consider a balanced marketing approach
Promoting one’s cloud brand in the cloud -- e-mail blasts, for example -- seems a natural tendency. But MSPs might want to pursue more traditional means as well.
“The service is delivered in the cloud, but ultimately that service is consumed by somebody in the physical world,” Allen said.
Info Exchange, he noted, has supplemented search engine optimization and e-mail marketing with an offline campaign featuring newspaper ads and radio spots. This year, the company will add conferences and presentations to the mix. Allen said a brand that customers recognize from a combined online and offline marketing campaign can “pick up a premium price” compared with a strictly cloud brand that customers don’t hear about locally.
“The key, however, is to always deliver quality service and to exceed the customer’s expectations,” Allen added. “The goodwill that the brand accumulates over time will allow the MSP to compete on service value rather than purely on price.”
And don’t forget: Survey your customers quarterly – using tools like SurveyMonkey.com. Then, follow-up with face-toface interviews to see which customers may be ideal reference accounts for your business. Don’t be shy about asking your best customers for referrals. The top MSPs, MSPmentor has found, generate more than half of their new business from customer referrals.
5. Revisit Billing Systems
Having built and promoted cloud services, MSPs shouldn’t neglect getting paid for them.
To that end, companies should look to their billing systems. Streamlined billing will become increasingly important in a maturing cloud business. As competition heats up and services become more commoditized, “you have to be able to bill quickly and accurately,” Allen noted.
His suggestion: automate wherever you can in the billing process. The key steps include receiving charges from suppliers, inputting those charges into a billing system, adding an MSP’s margin, invoicing customers, and conducting follow-up for any overdue items. It’s a costly cycle, Allen said, and one that contributes to overhead.
“I would recommend making sure you have the billing sorted out,” he said.
To boost its billing system, Info Exchange wrote a custom application extension to its SugarCRM customer relationship management system. The add-on handles invoicing. Allen said he expects to further extend the billing system to accommodate the company’s growth plans.
The Need For Hosted E-Mail Services
Business inspiration may come from a variety of sources. In the case of Info Exchange Ltd., the departure of the service provider’s in-house Exchange administrator got the company thinking about the need for hosted e-mail services. David Allen, Managing Director at Info Exchange Ltd., based in Kingston, Jamaica, recalled his reaction to the company’s Exchange predicament:
“Why doesn’t somebody have this in the cloud?”
Info Exchange found a cloud provider and promptly mothballed its on-premise Exchange Server deployment. That was in 2006. In January 2007, Info Exchange became a hosted Exchange provider itself. Its internal hosting experience helped boost Info Exchange’s standing with outside customers.
“You need to become ... an expert in the domain and in the product you are selling,” Allen said. “One way to do that is to actually use it.”
Info Exchange could also draw upon plenty of experience in e-mail and Internet-based services. In 1999, the company began offering an e-mail protection service. With this service, customers’ e-mail is routed to Info Exchange’s gateway, where viruses and spam are quarantined prior to delivery to the customers’ in-house e-mail servers.
This service put e-mail partially in the cloud and provided a step toward outsourcing the entire e-mail function.
“Customers who owned the infrastructure would outsource antivirus and DNS [Domain Name System] management to us,” he said. “The next evolution for us was to be able to say, ‘We can now take the mail infrastructure as well and put that in the cloud and lighten your footprint.’”
Today, Info Exchange provides Exchange 2010 and Share- Point Foundation 2010 through Intermedia. The company continues to offer e-mail protection and markets a number of other cloud-based services
6. Wrap Services Around The Cloud
Cloud services need not stand alone. MSPs have an opportunity to monetize ancillary services surrounding their cloud offerings.
“If you are focusing on the messaging side of things, that’s a pretty big professional services area for a lot of MSPs and VARs,” Camassa said.
Camassa pointed to migration assistance as one example. Upgrades or changes to any IT environment always call for migration, he said. In the case of e-mail, MSPs can help customers extract their legacy data and transfer it to the cloud setting.
Cornejo, meanwhile, cited migration help as one of the key services Blue Ridge Internetworks provides in conjunction with hosted Exchange. The company also helps customers through their e-mail retention and disaster recovery strategies.
Professional services contribute to the bottom line. In general, MSPs add value through the relationship they maintain with customers, support, billing, migration, and administration, noted Curt Mark, manager of partner development at Intermedia.
“How do they make their mark up?” asked Curt Mark, manager of partner development at Intermedia. “It’s really all around the services they provide. MSPs wrap support and administrative services around ...the hosted cloud service to make it a full offering. For example we provide free behind the scenes migration support for our partner’s customers and in turn our partners can manage and bill for the service.”
7. Educate and Prepare Your Customers
It’s not enough for service providers to come to terms with the cloud. They must help their customers get there as well. The job for MSPs? Get customers ready for the cloud and help them through the transition.
“Most don’t know the benefits until they have it,” noted Ettore Dragone, president and CEO of 247TECH, an MSP in Bristol, Pa. “So, I think education is the biggest selling point.”
Once a sale closes, the emphasis shifts from education to information. MSPs need to keep customer apprised throughout the cloud migration process.
“It all comes down to people being informed of what is taking place,” Dragone said. “It comes down to the experience the service provider has in making the transition. It can go very smoothly or become a disaster.”
During the migration phase, effective communication depends on a through knowledge of the customer’s environment. MSPs should know whether a customer has multiple mailboxes and distribution lists among other details.
“Do the due diligence and proper analysis and then inform the people what to expect,” Dragone added.
Cornejo said Blue Ridge Internetworks uses a pre-sales questionnaire and a customer interview to help scope out the migration. A migration plan then establishes the schedule and also highlights the customer’s responsibilities, such as upgrading Outlook on client devices prior to the event.
“That kind of communication is critical to set the expectations,” he said.
And don’t forget: Customers are starting to ask their MSPs and trusted advisors about cloud computing. Major software companies and hardware companies now advertise cloud services via traditional media outlets like TV and radio. Instead of reacting to big vendor cloud promotions, MSPs should be the ones defining the cloud conversation for end customers.
Remember: Small businesses typically prefer to work with other local small businesses. That means MSPs serving the SMB market are ideally positioned to shape cloud conversations, educate customers, and win recurring revenues for sound advice and solid cloud services.
Engaging With Intermedia
Intermedia backs its MSP partners through the cloud transition -- from training personnel to migrating customers to cloud services.
MSPs come to Intermedia with a range of experience, so the company tailors its support services to suit the partner. Intermedia offers those services to both affiliate and private-label partners http:// www.intermedia.net/resellers/compare-programs.aspx . Privatelabel partners sell Intermedia services under their own brand, own the customer relationship and bill for services based on their own pricing. Affiliates refer customers to Intermedia, which manages the account and bills the customer
Here are a few ways partners can engage with Intermedia:
Training -- Intermedia offers a combination of technical and sales training for its hosted cloud environment. Curt Mark, manager of partner development at Intermedia, said the company customizes its training according to what its partners need to learn.
Intermedia also provides its KnowledgeBase https://hosting.intermedia. net/support/kb/ , which serves up FAQs and videos on a number of topics including Exchange hosting and managing e-mail.
Sales Assistance -- Need help evangelizing cloud services? Intermedia provides hosted e-mail experts who sit in on a MSPs’ sales calls, fielding prospective customers’ questions. Intermedia’s also makes available a suite of marketing and sales tools to which partners can apply their own brand to.
“We get on a conference call with them as a consultant to help them uncover opportunities,” Mark explained. “We can help them through the sales or the evaluation process.”
Once the sale closes, Intermedia provides a Partner Portal to help MSPs provision new accounts.
Migration and Set-up -- Intermedia continues to offer partner support after the sale. The company offers partners a free behind-thescenes migration service for their customers. This layer of support helps partners calm customers who might view migration as a major hurdle, Mark noted.
With this service, Intermedia handles the back-end migration, transferring mail, contact data, distribution lists and settings. Essentially, Intermedia takes all the information housed on a customer’s current server and moves it to the hosted cloud.
8. Get Some Help From Friends
As you navigate the cloud don’t try to do it alone. The best MSPs are joining peer groups, entrepreneurial organizations and local business associations to stay educated and share best practices.
Scores of MSPs, for instance, participate in HTG Peer Groups. The peer groups allow MSPs to confidentially share marketing, sales and financial information with non-competing MSPs from other regions. The real-world information helps each MSPs to formulate quarterly, annual and longer-term business strategies.
Meanwhile, smart MSPs also attend channelcentric cloud gatherings such as the Intermedia Partner Summit. Many also participate in local business forums that are a great source of advice and new business relationships.
Conclusion
These paths to the cloud offer a few points to ponder for those companies seeking to make the technology a core competency. But while service providers may be entering unchartered territory, but they need not go it alone. Vendors such as Intermedia offer advice and assistance (see sidebar). And they can also learn from peers (see sidebar).
“Some service providers may feel intimidated by the cloud,” said Leibholz. “But here’s the good news: The best MSPs are generating double- and triple-digit growth in the cloud. And MSPs already understand recurring revenue business models. So moving to the cloud is an evolution that can deliver revolutionary results.”
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