Pete Langas

By Pete Langas, Director of Sales & Business Development, Nerdio

In working with a global community of IT channel partners in my role at Nerdio, I have become intimately familiar with the diverse array of reseller types in the market. In particular, I have been able to glean some key characteristics that successful, cloud-first managed service providers have in common.

By now you’ve likely heard the term “cloud first,” coined in 2010 by then-federal CIO Vivek Kundra. It’s come to mean a policy of running as many systems as possible in the cloud. Essentially, a CIO needs to justify why any new or replacement service should run anywhere except in a cloud architecture — whether public, private or hybrid. But let’s define what we mean by “successful” in light of the fundamental shift in the channel model where traditional value-added resellers and IT services companies relinquish their reliance on lumpy, break/fix sources of revenue and nurture more stable, predictable revenue streams from recurring services.

For a while, it’s seemed logical for MSPs to sustain both models simultaneously, taking on the new world and pricing structure of cloud-based products while relying on a safety net of income from fee-for-service jobs. After all, there is economic pain associated with forfeiting some (or even all) one-time payoffs in the quest to build sustainable income streams. It can certainly adversely affect cash flow and affect things like compensation for salespeople. These issues are not insignificant and need to be addressed in the near term, but let them derail you from the big picture and the long-term “thrivability” – and even survivability – of your business comes into question.

A “hybrid” approach to revenue may have been necessary once, but now could hurt resellers that remain too entrenched in lumpy income sources and not strategically focused on growing recurring-revenue streams.

In our experience, the MSP that is laser-focused on driving recurring revenue through advanced cloud offerings is best poised to weather any economic storms and come out on top. Yes, it’s acceptable for a reseller to keep a toe, or even a foot, in the lumpy revenue camp, but here’s how we can tell if a prospective channel partner is spearheading the future-thinking approach necessary for long-term success.

Focus, or lack thereof: The first thing we glean is whether the owner is working on the business versus in the business. Organizational size matters only insofar as the owner is freed up to focus on strategic initiatives and isn’t spending precious time on technical work. If we set a conference call with a prospective partner and the owner can’t join because he or she is busy rebooting a customer’s server, that’s a sign that the company isn’t in a position to transform its big picture. The MSP most poised for success is the one with tactical oversight of the transition from focusing on reactive, break-fix IT to proactive, preventative management.

Expertise: The second aspect we look for is whether this company has …

… the wherewithal to expertly guide customers into the cloud, whether public or private. We already touched on the economic hurdles and being able to forgo the ice-cream cone in the short term to get the keys to the ice-cream factory in the long term. While this may also entail an assessment of the partner’s ability to migrate customers from a technological perspective, this is far less of an issue because we, and most cloud providers – not to mention distributors – are equipped to handle the mechanics.

What’s more important is the reseller’s ability to effectively communicate with customers about the advantages and benefits of moving to the cloud, including key factors like better scalability, reliability and hopefully security. This discussion may sound relatively straightforward, but it’s actually pretty nuanced — it’s about being able to clearly articulate the value of the cloud for that particular customer and making them feel comfortable about moving precious data and applications.

A big-picture view: The third aspect is a deeper cultural resonance and understanding of why advanced cloud offerings are game-changing for both the reseller and its customers. Some MSPs tend to get bogged down by a conversation about TCO. While there’s lots to consider there, remember, we’re not comparing apples to apples when it comes to the overall value proposition. For the resellers we talk to who grasp this, we find it resonates from an operational perspective – such as, IT as a service can afford better operational efficiency – or from a sales perspective — for example, packaging all the components of IT infrastructure together is of great value to customers.

Of the prospective partners I meet with, I’d estimate approximately 25 percent are truly focused on creating recurring-revenue streams, another 25 percent are still bogged down by the lumpy mindset, and the rest are stuck in a limbo of talking about wanting to expand their cloud offerings, but not actually doing it. For that last camp in particular, this is a critical, make-or-break time. cloud

With more than 25 years of IT experience with consultants, VARs and service providers, Pete Langas brings his expertise to Nerdio as the director of sales and business development. Before things like “wireless” and “cloud” were cool, Pete had already been there and done that. Whether it be founding and growing tech companies and startups, or building and nurturing sales teams, Pete has always successfully conquered the challenge.