Do Customers Know the True Cost of Microsoft Azure? Do You?

Selling Microsoft Azure represents a big opportunity for MSPs, but with so many complex components to consider, providing full cost transparency and predictability to customers remains a major hurdle.

April 5, 2018

4 Min Read
Thinking in data center

By Amol Dalvi

When it comes to Microsoft Azure, it’s relatively easy to sell customers on the business benefits — better scalability and agility, enhanced security, global reach and more. But what about TCO?

Estimating the actual costs of provisioning entire IT environments in Azure can be pretty complex. In fact, many CSPs and MSPs don’t have a real grasp on the numbers until after they pull the trigger! Microsoft does offer the Azure Calculator to assist, but even with this tool, MSPs still need a solid grasp on a lot of critical information to make the cost output is relevant to their customers — and to protect their margins. Azure is a huge focus for Microsoft and only getting bigger, so it’s a smart idea to get up to speed now.

There are a number of components that I see MSPs tend to forget about, but that ultimately impact total costs. If you’re equipped to provide your customers with accurate and complete information, you can position yourself as a true expert in guiding them through the Azure journey. This takes you above and beyond simply offering IT services; now you’re delivering greater value through strategic budget and resource-advisory planning.

Here are four key areas to keep in mind when compiling Azure cost projections on behalf of your customers.

  • Think End-to-End: When MSPs think about standing up IT environments in Azure, a typical approach we see is that they tend to focus solely on Azure-related costs. Remember, however, that you’re not just providing your customer with an IT environment — you want to take care of everything they need to run all of their IT from end to end. It’s not uncommon for MSPs to forget about Office 365 licenses, for example, which aren’t accounted for in Microsoft’s calculator. Or if customers are using virtual desktops, don’t forget that each user will require a remote desktop server (RDS) client access license (CAL) to connect to the RD Session Host server and, from there, gain access to the desktop image or applications they need to use.

  • Don’t Forget the Plumbing: Another often-overlooked but important aspect in estimating Azure costs is the underlying infrastructure. Most MSPs account for major costs, like servers or backup and disaster recovery, but neglect other rudimentary infrastructure elements for which Azure charges. This “necessary but priced extra” category includes everything from bandwidth to a disk I/O to storage costs — again, fundamental components you need to run your customer’s IT services. Having the right plumbing is absolutely essential to a successful deployment, and the choices you make here will ultimately impact your bottom line. While each of these cost buckets might be small, they can fill up quite rapidly and wind up making a real dent in your margins.

  • Differentiate Through Optimization: Beyond the foundation, there are a number of ancillary capabilities built into Azure that can optimize your customers’ environments and save them money. These bells and whistles include special MSP-related discounts as well as Reserved VM Instances, which allow you to reserve virtual machines for a one- or three-year period for greater price predictability and cost savings. There’s also Azure’s Hybrid Usage Benefit, which allows your customers to use on-premises Windows Server licenses to earn special pricing for new Windows Server virtual machines. Harnessing these types of features will demonstrate to your customers that you can offer them true savings and maximize their resources.There are also a ton of add-ons, from Kubernetes containers to security bundles and load balancers tailored for Azure.  

  • Master the What-Ifs: Of course, provisioning and managing your customers’ environments isn’t typically a one-and-done deal. Their needs may evolve, especially if they’re focused on scaling their business. MSPs must constantly be thinking about what-if scenarios. For example, if you’re going to provide an RDS environment in Azure, how should you initially size that RDS, and what if your customer’s needs change? When it comes to servers, what if you opt for several smaller servers instead of one large instance — how will this impact both the end-user experience and the cost? Being able to think quickly and flexibly about the variables within your customer environments will help you service them more effectively, and ultimately lead to greater satisfaction.

The ability to offer cost transparency, predictability and manageability to customers as they move to the cloud is no longer a “nice to have” for MSPs — it’s an absolute must. Your customers are looking for their technology investments to make a real impact, and if you position yourself as their ultimate guide, you can set yourself up to drive stable, recurring revenue with higher margins.

A true software geek, Amol’s tech career began in software development in the ‘90s and hasn’t slowed down since. Prior to joining Nerdio, Amol was CTO and co-founder of a marketing software firm as well as an angel investor in a handful of innovative start-up companies in Indianapolis. Now, Amol is VP of product at Nerdio, where his passion lies in building easy-to-use, uber-intuitive software products. When Amol isn’t banishing IT headaches for SMBs by making magic happen behind the scenes at Nerdio, you‘ll find him biking, hiking, running or walking the many beautiful trails in Southern California.

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