Expanding MSP Business by Selling Cloud Computing Services

By 2022, less than five percent of applications migrated to a public cloud will move back to an on-premises data center, signaling that the future of business technology lies in the cloud.

While of course this is not the case for all workloads, enough businesses are moving to the cloud that MSPs that do embrace it will tap into a lucrative future.

This article teaches you how to grow with the cloud and how by selling cloud services you can boost your revenue, expand your customer list and thrive in this new era.

Expanding MSP Business by Selling Cloud Computing Services. Source: iland
Expanding MSP Business by Selling Cloud Computing Services. Source: iland

Content Summary

Growing with the Cloud
Selling Peace of Mind: Disaster Recovery as a Service
Selling the Foundation of the Data Center: Infrastructure as a Service
Becoming an Advisor
Fewer Tickets, Better Margins
Moving Customers to the Cloud: Not the Challenge it Appears
Your Partner in Growth: The Cloud Service Provider
Cloud Services and the MSPs of the Future
Take the Next Step

Growing with the Cloud

Cloud services continue their steady—and rapid—growth. Gartner predicts spending in public cloud services will reach $186.4 billion in 2018 (Gartner, Forecast: Public Cloud Services, Worldwide, 2015-2021, 4Q17 Update, Jan 2018) and that by 2021, 28 percent of all IT spending will be for cloud-based infrastructure (Gartner, Forecast Analysis: Public Cloud Services, Worldwide, 2Q17 Update, 2017). What is not experiencing a steady or rapid growth is the average IT budget.

That means that spending in the cloud potentially pulls budget from elsewhere. For managed service providers (MSPs), who rely on that IT spending, the case for selling cloud services grows stronger every day. By offering cloud services, you can be more valuable to your customers, who will be more fully invested in your offerings and more loyal to your company. Perhaps most significantly, by expanding your offerings, you stand to grow your business. If you include Infrastructure as a Service (IaaS) as a part of your portfolio you can reasonably expect growth of four to ten times the level you see today.

Managed Service Providers that include IaaS in their portfolio can experience growth of 4x to 10x.

The challenges involved, such as maintaining visibility, strong margins and security and compliance for your customers, can be overcome, as we’ll see. With the right cloud partner and a solid strategy, you can minimize headaches and capture dramatic business growth.

Selling Peace of Mind: Disaster Recovery as a Service

A logical place to start with cloud services is with cloud-based backup and Disaster Recovery as a Service (DRaaS). Many MSPs already require, or strongly advise, customers to have DRaaS solutions in place. So why not consider selling the solution you’re already advocating?

DRaaS offers compelling benefits for customers, making it a valuable addition to your portfolio. Customers get an operating expenditure (OPEX) model and can avoid massive up-front costs and being tied to specific hardware. This provides flexibility, so customers don’t need to plan data center changes years in advance. DRaaS allows customers to try new solutions with minimal investments, so they can find the right fit for their organization—and thus become more satisfied customers.

Selling Peace of Mind: Disaster Recovery as a Service. Source: iland
Selling Peace of Mind: Disaster Recovery as a Service. Source: iland

For the MSP, selling DRaaS offers another source of predictable and recurring revenue. It’s a suitable solution for a variety of verticals—almost any industry can benefit from it. That also makes DRaaS a compelling upsell in many situations. And because it’s an operating expense for your customers, it means a shorter sales cycle for you.

Partnering with a quality disaster recovery vendor makes all the difference. The right one can offer a single console or management view that makes it easy for you to manage backups and disaster recovery both on-site and in the cloud. This unified view allows you to streamline operations. Selling DRaaS will also put you in a position to influence and help your customer set service level agreements, so you can deliver the kind of uptime that cements your relationship with your customer.

Selling the Foundation of the Data Center: Infrastructure as a Service

Gartner estimates that through 2017, more than 80 percent of CIOs were pressured by business management to evaluate migrating their data centers to cloud IaaS (Gartner, Cloud Strategy Leadership, David Mitchell Smith, 2017). Your customers are almost assuredly feeling this pressure and many will be moving to IaaS.

There’s good reason, as IaaS allows organizations to scale easily without purchasing new hardware. Customers can pay for what they need now, not build a data center based on what they need during peak periods or what they’ll need in three years. And while facility costs or other physical issues can slow down on-premises growth, there’s little limit to scaling in the cloud.

Selling the Foundation of the Data Center: Infrastructure as a Service. Source: iland
Selling the Foundation of the Data Center: Infrastructure as a Service. Source: iland

This improves flexibility for customers, as they can add or subtract resources based on their specific business needs. The details of provisioning new hardware, such as patching or updating, are handled by the cloud service provider (CSP). Customers can request and receive new cloud services much more quickly than on-premises systems, providing them with impressive agility.

That means that if you're not moving to the cloud, you could be left behind. Source: iland
That means that if you’re not moving to the cloud, you could be left behind. Source: iland

Becoming an Advisor

All of these benefits for the end customer, and the competitive pressure, don’t much matter if selling IaaS is difficult or unprofitable. Luckily, it is anything but. In fact, MSPs and the cloud can complement each other well (Infoworld, The case for managed service providers in your cloud strategy, David Linthicum, May 2015).

One benefit that can be hard to quantify but easy to appreciate is the way selling cloud services can put you in the position of a trusted advisor to your customer, rather than someone who simply “keeps the lights on.” This is particularly true for MSPs operating in specialized industries. Customers today are savvy enough to know that not all clouds are equal. Many are actively searching for advice on what kind of cloud can best help them meet their unique business and compliance demands.

The cloud can be a confusing space, with many vendors making bold claims. Plus, a recent enterprise analysis revealed that while organizations agree on the importance of the cloud, 40 percent of firms are struggling to recruit staff with cloud skills (IT Pro Portal, Making the journey to the cloud with a Managed Service Provider, Tony Connor, Jan 2018). This combination of desire for the cloud and lack of skills means an MSP offering cloud services can be in a unique position to add value.

Fewer Tickets, Better Margins

Selling IaaS makes it possible to add new accounts or dramatically increase sales with your current accounts without significantly expanding support staff. Yet it also offers MSPs the chance to increase margins and reduce the time spent on tickets.

One way to increase margins is to offer an ecosystem of services around the cloud platform. Customers interested in IaaS don’t necessarily know how to run that infrastructure, so the need for managed services remain. A good CSP partner won’t offer managed services that would compete with an MSP. Plus, just as customers may turn to MSPs as trusted advisors, they may also turn to them first when looking for additional services, whether that’s migration consultation, system design advice or security assessments. These additional services can help MSPs scale rapidly.

The reliability of modern cloud data centers also means that MSPs offering IaaS can spend less time putting out fires. “As a service provider, when we take that on-premises system and put it in the cloud, we see stability and reliability go up, and that reduces tickets and problems associated with it,” said Jeffery Lauria, vice president of technology at MSP iCorps Technology (Tech Target, How does offering managed cloud services impact MSP business operations?, Crystal Bedell, Feb 2015).

Selling IaaS can help you grow without the growing pains.

Common Concerns: What MSPs Need to Know
If the case for selling cloud services is so clear, why aren’t all MSPs moving in that direction? Some are simply unwilling to leave their comfort zone. But others have legitimate concerns, chief among them is the ability to maintain their streamlined business model and the security their clients demand. Here’s what you need to know about those common concerns.

Visibility: Available in the Right Cloud
The key to success for most MSPs is streamlining systems so a few well-trained staff can manage a number of clients, data centers and machines. This kind of visibility and centralized management is available in the cloud. The key is to find a cloud service provider willing to provide that visibility. The best offer a single view that gives your staff one place to go for all management tasks. This is why it’s important your CSP partner is standardized on a stack that complements your virtualization infrastructure. The standardization will ease management and visibility, helping your customers achieve all the benefits of the cloud.

Security: No Longer an Issue
While security has traditionally been a fear for those moving to the cloud, the fact is that advances in cloud services mean you can confidently sell the cloud and allay any of your customers’ security fears. In fact, cloud is often more secure than on-premises data centers. According to Gartner, through 2020, public cloud IaaS workloads will suffer at least 60 percent fewer security incidents than those in traditional data centers (“Cloud Strategy Leadership,” David Mitchell Smith, Gartner, 2017).

Moving Customers to the Cloud: Not the Challenge it Appears

Moving a customer’s data center to the cloud is not a trivial undertaking, but it doesn’t have to be stressful either. Cloud service providers often provide some basic migration support. While detailing every step of a migration is beyond the scope of this white paper, it’s worth discussing the big picture. Breaking the process into three steps and tackling them in order can take the stress out of the project:

  • Inventory your customer’s data and applications.
  • Work with your customer to tier apps and data based on critical need.
  • Determine which physical servers will need to be virtualized.

As you know, using familiar technology is key to your business efficiency and the success of your customers. If your customers are not already standardized on a hypervisor platform, you should encourage them to do so. That will make their move to the cloud much simpler, as vendors such as VMware have tools designed to help migrate workloads.

In the end, how you migrate the workloads will depend on your customer’s network connectivity and what is in their environment. Good CSPs offer assessment tools that can help you analyze what’s in your customer’s data center now so you can make actionable plans for migration. The best tools make it easy to provide customers with accurate quotes, so they know what to expect and so you can deliver a migration that meets their needs.

One effective method of migration is to take advantage of disaster recovery tools. After all, DRaaS helps you temporarily run a customer’s production environment in the cloud, so it already has the tools you’d need to permanently move the customer’s environment there. The same process you use to set up a DRaaS solution can, with a little additional preparation work, make for smooth, predictable and highly automated migration.

Your Partner in Growth: The Cloud Service Provider

Achieving all the benefits mentioned above relies on working with the right CSP. To keep your workload manageable, streamline your processes and protect your bottom line, your partner should provide the best technology and options for managing cloud workloads. A single management console is crucial.

In addition to this single pane of glass, there are other things to look for in a CSP. Your partner’s data centers should be:

  • Up-to-date and robust: Your CSP should be able to provide you with information on how its data centers are backed up and diversified across different areas to protect against regional disasters.
  • Compliant: If you operate in a specific industry, your CSP should be as comfortable with that industry’s particular demands as you are.
  • Secure: Your CSP should have current security software as well as procedures and rules for physical access to the servers.

You should also select a CSP with a flexible partner program that can provide you with favorable margins. The CSP should offer training or materials to help you sell cloud offerings.

You should feel like a true partner, and that feeling should extend to the CSP’s support. While you’ll be providing initial customer support, your CSP should be available 24/7 with tier-three support to help with more challenging issues and give you confidence that you can get an answer to any customer question.

As with any big business move, it’s wise to look to trusted third parties, such as analysts, to validate any CSP’s claims.

Cloud Services and the MSPs of the Future

By 2022, less than five percent of applications migrated to a public cloud will move back to an on-premises data center (Gartner, Predicts 2018: The Cloud Platform Becomes the Expedited Path to Value, Feb 2018). Clearly, the future of business technology lies in the cloud. While not all workloads will end up there, enough businesses are moving workloads to the cloud that MSPs that do embrace it will tap into a lucrative future. Cloud backup and disaster recovery can improve security for your customers, while IaaS offerings can improve their flexibility and lower their costs. Selling both can help boost your revenue, expand your customer list and thrive in the cloud era.

Take the Next Step

With more than 20 years of experience helping companies with cloud-based business continuity solutions, iland is ready to support your cloud initiatives, whatever they may be. As a next step, consider downloading another white paper, such as 9 Keys to a Pain- Free Cloud Migration or How to Find the Right Cloud for Your VMware Infrastructure.

Source: iland