Complex Hosting without the Complexity: Use Cloud Tech to Expand Services, Markets
Complex hosting, offering custom infrastructure environments built to a customer’s specifications, is among the more profitable services for many MSPs. Customers expect to pay extra for the consultative work with your architects and the custom deployment and management of your systems administrators. In addition, because of the custom work, customers usually sign minimum term contracts and changes require new quotation. However, those very characteristics are also why it is so difficult to scale your complex hosting service.
The labor intensive sales effort requires skilled staff to engage with customers in often several rounds of specification and proposal. System administrators spend time validating the design and implementation and then must provide appropriate monitoring and management. Sourcing, configuring, and implementing custom hardware and software stacks takes additional time and effort. To offset the cost of hiring and developing the people with these skills, your deals have to be sizeable, and this requires multiple quotes and pushes the decision up to the executive level at your customer. So, while the deals are profitable, they take time and effort to develop, and your market is limited. The result is that scaling your business remains difficult.
Costly infrastructure is the very problem cloud computing was developed to address, and when it debuted many proclaimed the end of MSPs. It’s understandable then, that many MSPs have tended to see cloud as competitive. After all, if anyone can deploy a virtual machine at a large cloud service provider with an API call, there shouldn’t be a need for MSPs, right? Fortunately, nothing could be further from the truth. Building scalable, reliable services in the cloud still requires significant skill, Most businesses, though, lack knowledgeable and experienced systems administrators. The differential in skill is your sales opportunity. Thus MSPs’ core competencies in design and operation are still valuable in the cloud era.
However, there’s more opportunity for MSPs, because cloud isn’t just a business model. Rather, there is new technology being developed. The objective of that technology is to make data center resources consumable without access to the data center. The infrastructure itself; servers, switches, storage, and more were never developed with that in mind. Remotely using data center resources, though, isn’t limited to end user organization. If adopted properly this new technology can allow MSPs to remove the complexity inherent in complex hosting, expand their services, and enter new markets.
For instance, MSPs can use cloud to accelerate the sales cycle. Our MSP partners have successfully leveraged cloud to work faster. Infrastructure can be set up, torn down, and changed so quickly in the cloud they can actually engage customers collaboratively in real time. More specifically, our own CA AppLogic cloud platform provides visual drag-and-drop infrastructure. Solution architects and system administrators often use the visualization to create and manage infrastructure with the customer. Customers can more easily understand what’s being proposed because of the visual display. As a result, the typical specification and quote cycle can be reduced or even eliminated.
In fact, some MSPs are now building expert centers and providing the service via online meeting to further accelerate the process. While some customers aren’t ready to accept an online session, many are because cloud infrastructure can be changed readily and therefore doesn’t have the lock-in risk associated with traditional deployment. Using visual infrastructure allows building and refining infrastructure iteratively with little or no cost for changes.
How your system administrators manage customer infrastructure will change as well. Rather than work in the data center, they can work from anywhere they have internet access. Such mobility produces new opportunities for your business. Your team can manage infrastructure from the customer facility, again collaboratively. In addition, if your customers need resources overseas, your team can run those resources from your office. Thus, the overall cost of management of the infrastructure is reduced. You can capture this as margin or use it to lower the bid to the customer to capture more customers.
Accelerating the sales cycle and managing infrastructure online when using cloud reduces the overall cost of sale significantly. Reducing your cost, though, is yet another enabler. In the opening paragraph I mentioned that the cost of complex hosting limited the market. By reducing the cost, cloud computing open up new markets for you.
The disruption happening in hosting and managed services isn’t without its risks though. Cloud enables services to be portable, reducing or eliminating customer lock-in. MSPs must work more closely with clients to ensure ongoing success and satisfaction. In an earlier MSP Mentor blog I also noted how metering data can be used to identify customers whose usage is being reduced and may need additional attention.
Cloud computing is disrupting the hosting and managed services market. However, this disruption will bring new customers and new opportunities to aggressive and innovative MSPs.
If they haven’t already, MSPs should investigate adding or expanding their complex hosting services using cloud technology.
Bert Armijo is VP of product marketing for CA AppLogic. He is an industry expert and frequent speaker on cloud computing and has a 30-plus year track record of bringing new technologies to market.
