If you’re a growing IT Managed Services Provider (MSP), you know the formula: 1. Advise clients on how to choose the right IT solutions, 2. Implement them, and 3. Provide the ongoing services that keep them operating as efficiently as they did day one. But you also know the model is changing with cloud [aka Infrastructure as a Service (IaaS) or Platform as a Service (PaaS)], and maybe you feel a little out of your comfort zone. Successfully providing cloud solutions requires a different approach. Your financial model and support model are both shifting if you’re not installing and maintaining local hardware. But, the change can be better for clients and MSPs if you can sidestep common pitfalls and leverage the right cloud options.
Challenges MSPs Encounter When They Sell Cloud
Probably the biggest hurdle long-established MSPs face when preparing to provide cloud services is with their business model. You may sell some solutions “as a Service” and have a monthly recurring revenue (MRR) stream, but if the majority of your business is project and break-fix work, shifting large batches of clients over to IaaS could create cash flow issues. Big paydays for on-site infrastructure projects will be gradually replaced with smaller, recurring payments. Until you build MRR to the point where it covers monthly expenses, cash on hand could be lower and somewhat unpredictable. You will also need to factor in time for your team to get on board with the new business model. This change impacts accounting and finance, techs who need to carefully track services, and sales reps who will probably need to agree to new opportunities in their commission model.
Speaking of sales, your sales reps will need additional education in their consultative approach to sell cloud. IaaS is not a one-size-fits-all solution. There are myriad cloud products available to clients. Many MSPs are leveraging their Microsoft partnership to sell Azure. AWS and Google have equally compelling options, and many other providers are building their cloud infrastructure in compelling ways that MSPs can leverage for their clients. Helping your client choose the right solution stack and services is vital to their success. Selling cloud services has tremendous upside for MSP’s and some of the best opportunities for continued MSP growth lie in addressing related needs through consulting, cross-selling additional solutions, and building your security solutions.
You Need Cloud Expertise
When you sell cloud infrastructure, it’s not like selling a piece of hardware or even a Software as a Service (SaaS) application. Clients will expect you to help them successfully transition their on-premises systems to the cloud. These projects take careful planning and know-how to determine which applications can (and should) move to the cloud and which need new architecture. You also need to advise your client on which cloud services to use to keep them in compliance with industry or data protection regulations.
Cloud security is another vital issue. Users often think that the cloud vendor has security covered, but comprehensive cybersecurity usually requires that the end user deploys additional solutions. Your clients need help determining how to close any gaps that leave them vulnerable.
To maintain good relationships with clients, MSPs also should have a good understanding of cloud costs – and how to advise a business to keep costs under control. For example, assisting them with accurately forecasting cloud usage, so they don’t have to pay higher costs for on-demand capacity, and helping them take advantage of autoscaling. Some of this can be difficult with hourly payment models from some cloud providers.
MSPs who decide to add IaaS to their offerings need experienced resources to successfully sell cloud and provide the guidance that their clients need. The current demand for skilled IT talent may make it difficult to find the right people, however. An alternate strategy is to find a firm that specializes in cloud and use them as your “cloud department.” Partnering to acquire the expertise you need enables your business to still receive revenue from cloud projects, maintain the level of control you prefer, and continue to earn revenue from the additional services you provide.
Can Your Business Afford to Move Forward without Cloud?
Gartner reports that the global public cloud IaaS market grew 37.3% in 2019 alone to a total of $44.5 billion. The firm also found that all public cloud services – IaaS, SaaS, and Platform as a Service (PaaS) — will grow 6.3% this year to total $257.9 billion, driven by the pandemic and remote work. IaaS is forecast to grow 13.4% to reach $50.4 billion. The overwhelming demand for cloud services gives MSPs little choice but to find a way to deliver to stay competitive and maintain their market share.
Your business’ foundations may be deep in on-premises IT, but its future is in the cloud. Start building your strategy for how to acquire the talent and provide the solutions your clients need.
Virtual Systems is a cloud-first IT partner empowering MSPs across North America to deliver excellent cloud outcomes to their clients and help make a seamless transition to a cloud-first business model.