Re-Thinking the Cloud: the Best Cloud Options for MSPs

In the wake of Hurricane Sandy, questions have been raised about the viability of the cloud. If your data is only available over the network, and you can’t get access to the network, your operations are down until network access is restored. I certainly have experienced this personally with the power outage, internet outage, and phone / cell phone outage at my home office. And I’m one of the lucky ones. Today I am working from the YMCA where I can plug in my laptop and get access to not-very-good WiFi. (Other services available to community members: hot showers!)

(On the other hand, if your on-premise equipment is under four feet of water, the cloud is probably looking pretty good.)

Cloud is a big deal for the IT industry in general and for MSPs in particular. Maybe that’s why so many of them stuck around last Thursday  in Montreal until 6 pm after a long day to listen to Kent Erickson, CEO of ChannelCloud, offer his perspective on how MSPs should build their cloud services. Erickson spoke at the N-able Global Partner Summit there.

MSPs have a number of choices, Erickson said. They can build their own co-location or data center, they can purchase from an Infrastructure as a Service (IaaS) provider, they can go through a cloud  broker, they can partner with a cloud aggregator, or they can focus on consulting and integration work.

Erickson believes MSPs will find the most success with the last of these choices. That’s because cloud and infrastructure as a service is becoming a commodity. That means MSPs will realize less and less profits per customer as prices fall.

On the cost side, if you build your own data center you are incurring a capital cost and you face a number of risks that go along with that infrastructure from operational risk to design risk to a steep learning curve to high fixed costs to the need for a high degree of financial expertise.

Infrastructure as a service puts you in that commodity pricing realm while going through a brokerage or aggregator means that someone else is taking a cut of the profits.

But consulting and integration work allows an MSP to provide the most added value and therefore commands the biggest premium on price. MSPs can expect to charge for their expertise. The downside is that quality talent is not cheap or plentiful and there are fewer recurring revenue options.

Perhaps the best choice is one that combines consulting and integration with some form of cloud brokerage partnership and/or aggregation. MSPs want to be a one-stop shop serving all of their customers’ IT needs.  This approach combines the premium price of consulting work with the opportunity for recurring revenues. It also diversifies the business which can mean greater long term stability.

What’s your approach? And are you or your customers rethinking cloud approaches after Hurricane Sandy?