Making Dollars and Sense of Cloud Computing

Let’s dispense with the technical talk about cloud. Instead, let’s focus on how MSPs are making money selling cloud-based services and solutions.

The real problem behind cloud computing doesn’t reside with the technology, but the service model.  Where MSPs struggle is how they can get up to speed on the technology, build service delivery capacity and scale sales fast enough to recover their investment expenses. Let’s face it: It’s a challenge that confounds the lion’s share of channel partners today, but isn’t necessarily unfamiliar territory when you look at the evolution from product sales – to solutions – to managed services.

The upside: Enterprises and midmarket organizations are facing the same issue, but don’t know the fix. They can’t scale their cloud investments fast enough to sustain cost-effective management, maintain security levels or deliver a reasonable level of assurance or return to stakeholders when it comes to gains. These guys view cloud adoption as so painful that in a recent Cisco survey it was noted the average IT admin would rather get a root canal than do a cloud migration.

Get Going

The point I am making is this: Now’s the time for solution providers and MSPs to make their move and stop thinking of the cloud as some wondrous, wild technology that needs taming. Instead, focus on what changes need to be made to your business model and what service capabilities you need to acquire in order to make the cloud a part of your value proposition.

One of the insider’s tips to making money selling cloud services is the continuous feeding of the sales funnel – ensuring more clients are activating and that those accounts are being sold to horizontally to increase account revenue. In the services world that metric is called ARPU, or average revenue per user. The more revenue you bring in, the more you’re able to scale cloud capacity.

The challenge is having the capacity and support expertise for all those service accounts once they’re sold. You need infrastructure, bandwidth and support experts fluent in multiple platforms and applications. The cost of these alone can be crushing so do your homework and pay attention to the math.

Three Areas That Matter Most

Out the gate, take inventory on these three areas:

1. Your Customers:  What are the true business needs of your customers?
2. Your Business:  What does your business need to build and grow a cloud practice?
3. Your Support Network: Who can you team with and rely on to deliver service capacity for resell and augmentation?

Hosted NOCs provide infrastructure and trained support staff on a consumption model, which means you only pay for what you use. It may sound trite, but making money with cloud comes down to maximizing revenue while keeping expenses at a minimum. It’s also parallel to what your customers are looking for: maximum value with minimal investment. You can provide that by building cloud services practices with partners who can grow your business without breaking your bank with upfront investments and ongoing service fees.

Don’t overinvest or sell yourself short when it comes to making cloud services a reality for your business. Partnering to expand your services in a more cost-effective, productive and scalable way really is the cloud channel model of the future. Not only does it secure your value, capacity and revenue potential, but it will help boosts your profitability and performance capabilities.

For more information, download our recent whitepaper – Cloud Service Economics or contact the NetEnrich sales team at 408-436-5900, x2.

Justin Crotty is senior VP and GM of NetEnrich, which provides closet to cloud services for MSPs and mid-market IT service providers. Monthly guest blogs such as this one are Talkin’ Cloud’s annual platinum sponsorship.